A 51% attack refers to a potential attack on a blockchain network, where a single entity or group of entities control more than 50% of the network’s mining hashrate, or computing power. This control could potentially allow them to disrupt the network.
Theoretically, with such control, these entities could carry out a number of disruptive activities, such as:
- Double spending: The attacker could spend the same digital coins more than once. Because they control most of the network’s hashrate, they could reverse transactions they’ve made after they’ve been confirmed, allowing them to ‘double-spend’ their digital currency.
- Block withholding: They could prevent other miners from finding blocks, effectively monopolizing the rewards from mining new blocks.
- Transaction Censorship: They could prevent certain transactions from gaining any confirmations, effectively blocking those transactions.
Despite the potential for such an attack, executing a 51% attack is not straightforward and requires a significant amount of resources. The design of most blockchain networks inherently discourages such an attack by making it more profitable for entities with significant computational power to use it for mining rather than attacking the network.
Also, even if an entity were successful in a 51% attack, the attack would likely erode trust in the currency, devaluing it. This makes the attack not just costly to execute, but potentially self-defeating. This factor acts as another deterrent for such attacks.