A cryptocurrency is a binary form of data. The creators have delineated it to function as a circulating medium. The cryptocurrency exchange works on the technology of blockchain. In recent years, this medium of exchange has gained quite a lot of popularity among the public. But along with the growth in its demand, several hassles have also emerged. One of those problems happens to be hacking or more specifically the 51% attack.
The growth in the usage of cryptocurrency has paved the way for hackers. They have found several new and creative methods in order to hack into the technology. Hence, one of those inventory methods happens to be the 51% attack.
51% attack in the world of cryptocurrency
Cryptocurrency works under the technology of blockchain. Managing to corrupt even the smallest part of this technology is considered to be hacking. The network of users persistently surveys these blockchain technologies. Due to this reason, it is quite hard to corrupt the system. However, in recent times hackers have managed to evolve their way of exploiting with the use of the 51% attack.
In this 51% attack, the hacker manages to obtain power over 50% of the hashing function. This power allows the hacker to tamper with the information stored in the blockchain. This further takes place by using the digital token several times. In this method, the hacker replicates the file. In a 51% attack, the hacker gets the ability to conduct a double spend. Double spend wipes out the record of transactions and hence, the tokens become suitable for reuse.
But it has also been noted that it is nearly impossible for hackers to carry out such a type of hacking in cases of well-grounded blockchains. However, small chains that have not been properly circulated yet are more prone to this type of hacking.
Effect of 51% attack on Bitcoin and Ethereum
The uprising of 51% attack in recent years had caused quite some damage. Blockchains like Bitcoin and Ethereum have gone through the hassle of dealing with this attack. One such case had been recorded in the month of August 2021. The total value of Bitcoin SV (BSV) had slipped by 5% per value. Furthermore, in 2019, Bitcoin Gold (BTG) had also undergone one such 51% attack. Moreover, Ethereum Classic (ETC) had also undergone numerous cases of the 51% attack.
How to steer clear of the 51% attack?
In recent times, cybercriminals have managed to carry out crypto hacking. However, there are some ways that can keep the blockchains free from such attacks. Some of those methods are listed below.
- Two-factor authentication. Activating this option will provide an additional strong shield against such hackers. This method will go a long way in protecting the wallet.
- It is of utmost importance to control every wallet with efficiency. Hence, the users should always store the majority of the collections in the multi-sig cold storage wallet. Storing them in hot wallets makes them more prone to hacking.
- It is always advisable to use different addresses for all the wallets. In this manner, hacking one of the addresses will not sacrifice the rest of them.
- The user should always turn off the phishing links. It is because of the reason that these cracking mails tend to invade personal information for hacking purposes.
Effect of the Law in hacking and this type of attack
In many countries, the government has labeled hacking, or more specifically crypto hacking as illegal. Nevertheless, the law does not quite prevent the hackers from resolving to the 51% attack.
Having said that, it is also quite important to understand that hacking entails certain benefits too. It is very beneficial when it comes to pinpointing a flaw in the security of a system. It helps in avoiding a huge amount of loss by the company.