A 51% attack is a potential attack on a blockchain network, where a single entity or organization is able to control the majority of the hash rate, potentially causing a network disruption. In such a scenario, the attacker would have enough mining power to intentionally exclude or modify the ordering of transactions. They could also reverse transactions they made while being in control – leading to a double-spending problem.
A successful majority attack would basically allow the attacker to double spend coins he doesn’t have. Sell them and profit from it.
How do we use a malicious hack in a positive way ?
Using a 51% attack in crypto is more about answering the question of how do we pick the assets we invest in? There are 2 tiers to any analysis. Fundamentals Analysis and Technical Analysis. I use each for it’s own purpose.
- Technical analysis, to evaluate the price (if it’s a good or a bad time to buy)
- Fundamental analysis, to evaluate if i should put any money in that asset regardless what the price says.
Let’s see a specific use case. One factor to take in account when considering any coin is it’s vulnerability. I use crypto51.app to find what is the cost of a 51% attack for various coins and how much hash power i can rent to do it.
Unlikely 51% attack
For something like Bitcoin, a hacker theoretically needs 262.339 $ to try attacking the network, but there’s no mining power available to rent.
Somebody that want’s to attack BTC would need to buy 2,963,138 Antminer S9 units (at 380$ each) to be able to match the current network hashing power. And then provide the infrastructure that supports 2,963,138 Antminer S9 asics * 1320W = 3,911,342,160 Watts. Witch puts the real price of a 51% attack in the hundreds of millions $. And even if it would be logistically possible. You should also consider the impossibility of the hacker to exit the market in $ once he did the hack. So a hacker would basically have no real means and no motivation to do it.
Probable 51% attack
How about other coins ? What if it costs 9 dollars to hack something like “Quantum Resistant Ledger” and there is 613% rent-able mining power available to do so . Is it smart to put money in a coin that can be hacked with 9$?
Well, there are people who consider it’s smart to put 12 million $ in this coin. Decisions like these are one of the reasons over 80% of retail investors-traders lose money.