In the world of cryptocurrency, most transactions that occur on the blockchain are safe. This is because the blockchain is a decentralized network of computers that keeps track of all transactions.
While hacks are rare, they do happen and there is no viable way for cryptocurrency exchanges to stop these thefts from occurring.
One of the most nefarious types of attacks that can occur in the crypto market is known as a 51% attack.
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What Is a 51% Attack
In a 51% attack, a single crypto miner or a larger group of miners can control over half of a network’s blockchain.
This threat is relatively rare due to the amount of computing power required to grasp and maintain that kind of control, but the outcomes of a 51% attack can be devastating for a blockchain network and the data contained in one.
What Happens During a 51% Attack?
The first thing that occurs in a 51% attack is that the attacker controls over half the network’s computing power.
They then typically use this power to manipulate transactions on other users’ accounts, usually sending funds to their own addresses.
If an attacker can accomplish this kind of attack, they can take several devastating actions:
- Double Spending: A user may spend their coins on one chain and then spend them again on another.
- Blockchain Reversals: Once a blockchain is reversed, it can no longer be trusted.
- Supply Reduction: A malicious miner could control the supply of a given token and hold it back to manipulate the price.
- Private Key Destruction: The private keys to wallets could be destroyed so transactions cannot be completed.
- Blockchain Forks: There is a chance that multiple blockchains will occur, causing a split of the coin’s chain.
How Vulnerable Are These Blockchains?
The extent of these negative effects depends on the blockchain system that is being targeted.
However, with the right amount of computing power and resources, it is feasible that a 51% attack can happen.
There are two primary actions that users can take to protect their blockchains from these kinds of attacks.
1. Only Use Reputable Digital Currency Exchanges and Wallets
This means that they have been around for a while, have a good reputation among the community, and are well regulated.
2. Be Careful Where You Store Your Coins
Users should ensure that they use cold storage techniques so that their digital currency is not vulnerable to attacks from “hot wallets.”
It’s also important to store your funds in different locations so that a single attack won’t be enough to cause devastating effects.
The key point to remember is that blockchain technology is still very much in its infancy, and there will inevitably be more attacks and hacks as the platform continues to grow.
However, users should do their best to protect themselves by using trusted wallets or exchanges and keeping a close eye on security news.