On May 24, 2018, a nefarious assault on the blockchain network of Bitcoin Gold, an off-spin of the original Bitcoin network, had confirmed a possibility of doom that had existed for a long time but lacked compelling evidence to prove its viability. That was the occurrence of “Majority Attack”, or “51% attack”.
The concept of “51% attack” itself is not recently produced. In fact, when blockchain technology had just started gaining popularity, economists already hinted that such an event may happen. They proposed that the democratic nature of blockchain may cause the same problem that happened in democratic politics, where the computational power is equivalent to vote. Before dwelling deeper into the specific scenario of attack, a person needs to understand the mechanisms of Bitcoin and the blockchain network it is based on. Within the blockchain network, a large number of miners are constantly spending their computational power to solve a difficult mathematical problem. When the problem is solved, a block that contains few-hundred pending transactions will be officially joined to the online ledger of the blockchain, and the person with the correct answer will then broadcast it to the rest of the network, letting them verify it and move to the next puzzle. Working within that system, everyone has a fair chance of controlling a part of blockchain by adding blocks that were produced by themselves. Any illegal actions, like forfeiting transactions, became impossible thanks to the peer-review system. However, when people or companies who possess a computational power unmatched by any other one in the network try to make changes to the blockchain, the whole peer-review system failed.
That’s basically what happened to Bitcoin Gold during the incident. According to the report from Fortune’s magazine on May 29 of this year, a hacker attempted to dominate the blockchain by solving the mathematical puzzles of blocks which other miners had not touched yet. Withholding the answers to these puzzles and sending them one by one in the right time, the block produced by the hacker prevailed in the blockchain system, leaving little leeway for other miners to review it. And within the blocks produced by this hacker, he/she falsified an exchange of cryptocurrency equivalent to 18 million dollars. As a result, the hacker still retains the cryptocurrency he or she traded for and the bitcoins the hacker traded with at the same time, a classic double spending case.
This event caused turmoil. Some worried that the rise of hash power marketplace, where ASIC manufacturers rent their devices to persons, had lowered the cost of launching “51% attacks”. And thus, this event may have become an epitome for possible attacks in the future. Others argued that only blockchain networks with a small miner base are vulnerable to such threats. In fact, the number of active miners in the Bitcoin network is almost a million times larger compared to the one of Bitcoin Gold, making a direct assault on Bitcoin itself almost an impossible deed. However, some conspiracists proposed that it was not inconceivable for a hostile nation, like North Korea, which has basically zero investment in the cryptocurrency, hence not harmed by the dropping value of cryptocurrency as a result of that attack, to launch a “majority attack” on a major cryptocurrency network, and thus caused tremendous financial loss. In an ideal future which cryptocurrency becomes mainstream, such an event may escalate into an economic failure on a national scale.
The attack on Bitcoin Gold revealed one of the shortcomings of cryptocurrencies. Many computer scientists are working on a solution that will sacrifice as little flexibility of cryptocurrency as possible to assure its users’ security of property. "As an industry, we have to put an end to this risk," Viglione said, pointing to efforts on Zencash to stop this from happening again. Improved security will not come overnight. Efforts must be made not only by technical professionals to improve existing systems. It is important for ordinary users to become more vigilant and cognizant of the cryptocurrencies they are using, and gain an awareness of the risks.
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