51% Attack in Blockchain – How it Happens and How Dangerous Is It?

Blockchain and decentralized networks are known for having elevated cybersecurity risks. These vulnerabilities can shake the trust in DeFi platforms, cryptocurrencies, and wallets.

Fortunately, blockchain technology has made significant advancements, learning from numerous cyber threats to enhance its infrastructure and increase trust.

The 51% attack is a significant threat that many networks faced between 2018 and 2020, with only one notable incident in the last year. Let’s review this security shortcoming, how it works, and how to prevent it.

Key Takeaways:

• 51% attacks in blockchains happen when the majority control is seized by one entity or group.
• Decentralized networks rely on distributed authority, and when one party controls the majority, it can make network decisions.
• Double-spending and blocking transactions are two common outcomes of 51 percent attacks.

Understanding the 51% Attack

The 51% attack is a cybersecurity threat that happens when a single party gains majority control, enabling it to make significant network changes and decisions.

The notion of decentralization is that no single entity gains authority over the entire network and that decisions, changes, and processes are made in majority voting and other protocols that share management.

When an individual or group gains more than half of a blockchain network’s mining or staking power, they can dominate the ledger, rewrite transaction histories, and prevent new transactions from gaining confirmations.

While advanced blockchains are designed to resist such breaches, some vulnerabilities persist, especially in newer DeFi projects, leading to significant breakdowns. Such occurrences can shake trust in crypto platforms, coins, and DeFi applications.

Why Does It Happen?

These breaches often happen to disrupt a blockchain project, gain financial control through double-spending, or for crypto ransoms. Weaker security networks or chains with lower mining participation are more prone to these attacks because it is easier to seize majority control.

How 51 Percent Attack Works?

When a malicious party gains control over a blockchain network by 51%, it can dictate actions. You would see them completing blocks faster than legitimate participants to gain a financial advantage.

This allows them to reverse transactions they confirmed, leading to double-spending issues. They can also block or delay transactions for their own benefit, rendering the network unreliable.

While they cannot create new coins from scratch or tamper with already-confirmed transitions, the shaken trust can significantly affect the entire blockchain and the overall decentralized system.

Fast Fact

Since 51% attacks are costly, some nodes can rent hash rates through cloud mining platforms to temporarily gain enough computing power to perform this hack at much lower upfront costs.

These are typical activities undertaken by 51-attack perpetrators.

Double-Spending

One of the most significant consequences of a 51% crypto attack is double-spending. This means that the attacker can spend money from the controlled network to buy a certain service or product, then manipulate their hashing power to reverse the transaction and spend the same coins elsewhere.

In other words, sending cryptocurrency to a merchant, receiving goods, and then reversing that payment by rewriting the blockchain’s history. Attackers can fork the blockchain to gain a majority vote and control, invalidate the original transaction, and reclaim their spent coins.

Double-spending erodes the credibility of digital currencies, making it vital for blockchain ecosystems to defend aggressively against such vulnerabilities.

Blocking Transactions

The perpetrator can halt payments or delay the confirmation of other transactions in a way that suits them, such as changing network fees or cherry-picking transactions.

This selective approval renders transactions pending indefinitely or being rejected without reason, massively affecting the network’s efficiency and reliability.

This power could be exploited to damage competitors, create panic, or exert political and financial control over decentralized networks.

Cryptocurrency Risks

A 51% attack represents a profound risk that affects users, investors, and developers. Financial losses from double-spending and frozen transactions can severely damage blockchains, decentralized exchanges, and cryptocurrencies.

This creates a chain reaction in the market. Once faith in a network’s integrity deteriorates, its market price can dramatically collapse. After a suspected attack, exchanges require more confirmations to process a transaction, sometimes hundreds or even thousands of blocks deep, to prevent double-spending.

Moreover, small or emerging projects with lower mining or staking participation will suffer financially from such an attack, limiting their ability to operate and potentially losing clients.

51% Attacks in PoW Networks

Proof-of-Work systems like Bitcoin blockchain are more prone to these attacks due to the nature of their validation process and shared control.

In a PoW network, computational power means voting rights, and when an attacker controls the majority of the network’s hashing power, it can outpace other miners combined and earn mining rewards.

Additionally, networks with smaller hash rates are more vulnerable because acquiring sufficient mining power becomes cheaper and easier. 

Therefore, major blockchains involve enormous hash rates, making an attack relatively expensive to perform and making smaller projects easy targets. Hence, many PoW chains encourage mining and shared authority to defend against such a potential threat.

51% Attacks in PoS Networks

Proof-of-stake networks replace mining with staking, making them more resilient against these attacks but not entirely foolproof.

In PoS networks, staked tokens translate into voting rights, meaning that attackers must own the majority of the staked assets rather than computational power.

Thus, acquiring 51% of a cryptocurrency’s total supply can be astronomically costly, theoretically deterring malicious entities. However, if a few large nodes gain collective ownership, this can make PoS networks susceptible to governance issues and collusion.

Therefore, PoS chains rely on good faith and community governance to ensure decentralization and combat takeover attempts.

How to Prevent a 51 Attack in Blockchain Network

Preventing a 51% attack demands solid technical, economic, and community-driven infrastructure. There is no one-size-fits-all approach to defending against these attacks, as it is more about implementing proactive layers to maintain integrity, resilience, and trust in decentralized finance.

This begins with deciding on the blockchain type, whether it is PoW or PoS. For example, PoS-based chains allocate voting rights based on merit, while PoW networks distribute authority based on network hashrate.

Ultimately, no blockchain is entirely immune to cyber threats. 51% attack prevention requires several proactive measures to reduce the risks:

• Increase Network Participation: Encouraging more miners or validators to join the network distributes power evenly among participants, making it less likely for any single miner to gain majority consensus.
• Implement Checkpointing: Adding frequent checkpoints within the blockchain’s code prevents attackers from rewriting transactions on the ledger, making double-spending attacks less feasible.
• Economic Penalties: Introducing a clear code of conduct and penalty system in PoS networks ensures all nodes act in good faith. Slashing is a deterring mechanism that punishes actors who break staking rules and limits, cutting their block rewards in case of violation.
• Diverse Mining/Staking Pools: Ensuring decentralization of mining and staking pools prevents one entity from dominating activities within the ecosystem.

Historical Examples

51% attacks remain one of the most common hacks in cryptocurrency, with consequences leading to lost trust and exclusion from major exchanges. Several prominent blockchains have suffered these breaches, revealing weaknesses in emerging and established systems.

Ethereum Classic, Bitcoin Gold, and Bitcoin Cash are a few examples of these instances. Let’s review how they happened and their outcomes.

Bitcoin Gold Attack 2018

In May 2018, Bitcoin Gold (BTG), a fork of the Bitcoin network, fell victim to a brutal 51 percent attack, where hackers gained sufficient hashing power to double-spend and steal over $18 million worth of BTG. Another successful attack also occurred in 2020, resulting in estimated losses of $72,000 worth of BTG.

Developers attributed the attack to Bitcoin Gold’s relatively low hash rate, which made it an easy target. This highlighted how smaller networks, despite high-profile branding, remain weak without robust decentralization and security.

The attackers exploited this vulnerability by creating new blocks, reversing transactions after goods or services had been exchanged, severely damaging BTG’s credibility and value, and delisting it from major exchanges.

Bitcoin Cash 2019

In May 2019, Bitcoin Cash (BCH) experienced a majority attack following a network upgrade dispute. This time, two mining pools performed the hack to block an unknown node from gaining unauthorized access.

This breach was caused by two legitimate actors, who briefly seized majority control to prevent network exploitation by a malicious actor who tried to gain majority control.

The attack was more a defensive mechanism than an attacking one. However, it highlighted vulnerabilities and how trusted participants can change their behavior.

Ethereum Classic 2020 & 2024

Ethereum Classic is an open-source, alternate chain that emerged following a hard fork on the main Ethereum network. It fell victim to multiple hijacks in 2020 and 2024.

During these incidents, attackers successfully reorganized thousands of previous block information, resulting in significant double-spending instances, taking advantage of the network’s low hash rate and staking participation. 

The network was a target of organized hacks that happened repeatedly between 2019 and 2024, with some attacks being carried out three times a year, causing long-term reputational damage.

Conclusion

The 51% attack remains one of the most serious threats to blockchain security. When a single person can dominate a DeFi network, the fundamental basis of decentralization and shared control collapses.

While this mostly occurs in emerging networks and those with low mining and staking activities, any blockchain can fall victim to a 51 percent breach.

DeFi projects with high community engagement, advanced technical safeguards, code checkpoints, and clear node policies are more likely to defend against these attacks. While fixing the damage is technically possible, the aftermath can be severe.