You must have heard about the incredible security offered by bitcoin and other cryptocurrency. But are you really sure?
Are you putting your hard earned money in the right spot or in the best instrument?
There are many altcoins, as well as bitcoin…are they safe? Hacks are something that you hear about occasionally. Many people and influential personalities lost all their bitcoins or cryptocurrency investments after a hack in a network.
But those hacks are not the ones we will be talking today. These hacks include simple wallet hacks or exchange hacks. Sometimes accidental deletion is also possible, but I wouldn’t call that a hack.
An exchange hack is when the security of a particular exchange has been compromised and all of the user’s data is vulnerable. This is also known hot wallet crypto hackers. Your assets are kept in the “hot” wallet. For example Binance, WazirX, etc.
The wallet hacks occur when a wallet is hacked. Some users are then targeted by phishing, which allows them to access the private keys of their crypto wallet.
Accidental deletion can occur if a paper wallet is lost or the hardware wallet is lost.
Today we will look at the 51% attack. It is a monopoly attack that results in the destruction of the entire network, not just one user.
Although m is a theory attack, and it is not likely to occur, it is one example of how a cryptocurrency system can be destroyed.
The 51% Attack?
This will help you understand how blockchain technology works. What are the basics of cryptocurrency technology?
If you are unsure of the basics, I recommend that you first read the previous articles and then go back to this post. A 51% attacking or the Monopoly attack is when a single individual or group of people obtains 51% of all the available hashing powers. This means that when everybody is competing in the proof to work structure to write next block in the blockchain the one with the 51% hash rate wins, making the competition obsolete and the proof o work system irrelevant.
Double Spending- They will double-spend their bitcoins, using the same bitcoins for multiple transactions. However, the transactions are not included in the private blockchain.
Censoring Addresses – they will be in a position to censor addresses such as transactions not from a specific wallet address to another.
Hijacking rewards systems – they will always be the one who wins the proof work structure. Only they will get the transaction benefits.
This will make it easier for others to attack crypto miners, and without any reward they will cease trading. They will become the owner of all the hashing energy mining their private blockchains.
This is not possible, as 51% is required to generate global hashing powers. Additionally, it will cost billions of dollar to get such mining capacity that outperforms everyone on the planet. In the end, no one will be willing to accept cryptocurrency whose value is plummeting more than ever.
Even so, it is possible to try to destroy the whole cryptocurrency network.
Notable points are: this attack cannot be used to create bitcoins or steal coins. Also, the underlying rules of the reward system and other rules cannot be changed.