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Blockchain is well-known for a variety of reasons. However, one of its most sought after features is the security inherent in its design. Blockchains are decentralized ledgers that are often shared among tens of thousands of computers and individuals, meaning that they don’t have a single point of failure for bad actors to attack. Blockchains are also typically public, meaning that network participants are able to identify attacks in progress much more quickly than closed and opaque systems operated by corporations and governments. That said, security is not perfect for any blockchain and they are susceptible to certain types of attacks and hacks, just like any other technology. Participants in the cryptocurrency sphere received a stark reminder of that weakness last week thanks to a 51% attack on the blockchain for Bitcoin Satoshi Vision (BSV).
A Return to Satoshi’s Nakamoto’s Original Design?
Bitcoin was created in late 2008 by a pseudonymous individual or group named “Satoshi Nakamoto”. While we don’t know much about Satoshi, we do know quite a bit about the protocol (i.e., the Bitcoin blockchain) she/he/they created. After all, the underlying software code has been publicly available since before the blockchain’s genesis block was mined and Satoshi remained in the community to answer questions and help troubleshoot the network for the first two years. Satoshi’s original definition of Bitcoin was as follows:
“A purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.”
A number of Bitcoin’s critics, including some from within cryptocurrency circles, believe that the flagship cryptocurrency has lost its way because it is not currently used heavily for transactions. During periods of high demand to use its blockchain, network fees can rise substantially, making it impractical to transmit low-value transactions over the blockchain’s base layer. Additionally, as many readers will know, Bitcoin has been compared more frequently to digital gold than to digital cash over the course of the current bull run.
These developments have resulted in claims that Bitcoin and its proponents have lost sight of Satoshi Nakamoto’s original goal of creating a digital form of cash that, perhaps, could replace forms of money our societies have used up to this time. As a result, a number of Bitcoin supporters created a fork of its blockchain that greatly increased the block size of the blockchain in order to reduce network fees for even the smallest of transactions. Out of this fork, Bitcoin Satoshi Vision was born.
Bitcoin Satoshi Vision Suffers Another 51% Attack
Bitcoin Satoshi Vision suffered a 51% attack early last week, but it was far from the first such attack on the network, even in recent times, as it was attacked in a similar fashion in June and July of this year. The attacks have not destroyed the cryptocurrency or its blockchain, but they certainly raise concerns about the network’s longevity should the attacks continue at the current pace.
But what is a 51% attack?
Bitcoin, Bitcoin Satoshi Vision, and a variety of other blockchains operate using the Proof of Work (PoW) consensus mechanism. Computers running on Proof of Work blockchains attempt to validate transactions by making billions of guesses in order to correctly identify a random number generated by the blockchain software. The computer that successfully identifies the random number is granted the ability to confirm the next block on the blockchain, after which the whole process starts over again with a new block.
Since every computer on a PoW blockchain has an equal chance of guessing the random number, the only way for a participant to have a greater chance of confirming a block is to have stronger computers, and more of them. The majority of blockchain participants want to process transactions correctly and are highly incentivized to do just that. After all, PoW mining grants both transaction fees and new units of the blockchain’s native cryptocurrency to the miner who confirms the block.
However, certain participants on the blockchain may want to repurpose it to benefit themselves at the expense of everyone else or even just attack it in order to shake user and investor confidence. A 51% attack allows them to do just that. In essence, if the attacker is able to control at least 51% of the blockchain’s mining power (i.e., more mining power than the rest of the network combined), the attacker has a greater chance of finding the random number first and can then choose to insert or ignore any pending transactions. The main purpose of a 51% attack is commonly to enable a blockchain’s native cryptocurrency to be double spent, or sent multiple times to different participants even though, in the end, only one of the recipients will actually receive the cryptocurrency.
Could BTC Suffer a 51% Attack Like BSV?
Since Bitcoin Satoshi Vision is a forked version of the original Bitcoin protocol, their underlying software codes share a large number of similarities. As a result, it is common for both newbies and veterans within the cryptocurrency space to wonder if Bitcoin could suffer the same fate as its smaller counterpart.
While technically possible, it is highly unlikely that Bitcoin would suffer a successful 51% attack due to the massive amount of mining power protecting its network. In fact, as illustrated below, the amount of mining power on Bitcoin’s blockchain is many magnitudes higher than the amount of mining power on Bitcoin Satoshi Vision’s blockchain:
In order to execute a successful 51% attack against the Bitcoin blockchain, an attacker would have to come up with nearly 100 Exahashes of mining power with which to compete against the rest of the network. To illustrate the sheer cost of executing such an attack, consider the following example:
The WhatsMiner M30S++, one of the most powerful ASICs (i.e., PoW mining machines) on the market, can perform 112 Terahashes, or .000112 Exahashes, per second. In order to generate 100 Exahashes of mining power, the equivalent of nearly 893,000 WhatsMiner M30S++ ASICs would need to be used. The WhatsMiner M30S++ currently costs over $7,500 U.S. dollars, if you can even find it in stock. So an attacker would need to spend nearly $7 billion U.S. dollars just to buy enough mining machines to execute a 51% attack. Remember, however, that this example does not take into account any other expenses associated with running ASICs, such as electricity (usually the highest expense), buildings in which to house the machines, and so on.
How to Protect Yourself
While unlikely, a 51% attack can happen on any Proof of Work blockchain. And if it happens to you, you won’t care how unlikely it seemed beforehand. Oftentimes, the best way to protect yourself from a 51% attack and the associated double spend is to ensure that you wait for several blocks to be confirmed on the blockchain after the block containing the transaction that you care about. This is because it is very difficult for an attacker to rewrite a large number of older blocks while also outpacing other miners who may be trying to validate successive transactions.
Each of us is responsible to make sure that our transactions, and the money backing them up, are safe from attacks on the blockchain.
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Very interesting topic I'd no clue what the vulnerabilities in blockchain were even if they're unlikely I guess it's something everyone should know about