Question on 51% attack

[Bitcoinnation]

I don't know whether am on the right board but I need some little help to grasp something.
I have been trying to read about the 51% attack but am having a hard time to understand the part where the attacker can "double spend the coins"

So in a layman's language
1.  What is a 51% attack on the blockchain?
2.  What would happen if someone managed to pull this off say on the bitcoin network?

Anybody well informed about this, I will appreciate your time and help.

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[bones261]

     To sum it up, if someone has more than 51% of the mining power, they can send coins to someone and receive goods/services/coins/fiat after getting enough confirmations. In the mean time, they can be working on an alternate chain and not release it to the network. On the alternate chain, the coins either remain unspent or are sent to someone else. Since the attacker has more hash than the rest of the network, eventually his alternate chain will be the chain with the most work. The attacker then releases their alternate chain, and the network switches to their chain because it has the most work. The original transaction disappears from the network. The attacker gets the goods/services/coins/fiat and the victim now has nothing.
     On the bitcoin network, this kind of attack is very expensive to implement. The risk the attacker takes is that it would probably make the market value of BTC or whatever coin he is attacking much less. One could argue that the attacker could make a big short sell on the market to actually profit from this. However, the cost to do this is so prohibitively high,(for BTC at least) that I don't think the markets are currently liquid enough to actually guarantee a profit with this strategy.

[Bitcoinnation]

<snip>

Thanks for the clearcut explaination.
So it got me thinking, Can't this kind of attack happen at the mining pool level? Let say a certain pool of miners has more than 51% of the mining power ( which usually is very likely with certain new blockchains) and they decided to carry out the attack or it just has to done by an individual miner who thinks his mining power is more than 51%?

[bones261]

<snip>

Thanks for the clearcut explaination.
So it got me thinking, Can't this kind of attack happen at the mining pool level? Let say a certain pool of miners has more than 51% of the mining power ( which usually is very likely with certain new blockchains) and they decided to carry out the attack or it just has to done by an individual miner who thinks his mining power is more than 51%?

Yes, it can be implemented by a pool of colluding miners. In fact it can be implemented by multiple colluding pools. The only problem with this is that humans are not the Borg. The more people you have involved in the conspiracy, the more likely it will be that someone diverges from the plan or becomes a rat. In order to properly implement a double spend, it must be done on the sly.  To quote from Ben Franklin, "Three can keep a secret if two of them are dead." Furthermore, the gang of thieves are going to somehow have to divvy up the bounty. I'm sure someone would end up getting royally screwed over.

[Bitcoinnation]

Alright mate, Thanks for taking your time to explain. I now don't have to scratch my head over 51% attack.
Cheers and have a good day 

[logfiles]

Well, I have just learned about this attack today through this thread. I didn't even know it was possible.
I just found out that it's also known as the Majority attack. It's actually happened a couple of times. I dunno how I missed knowing about it before

- Fool’s Gold? Bitcoin Fork Faces Cryptocurrency Exchange Delisting after 51% Attack
- Verge Suffers 51% Attack, Hard Forks in Response - guess that's why it dumped so badly.
- Researcher Livestreams 51% Attack on Altcoin Blockchain

If anything I have learned to go slow on this Bitcoin hard forks from today

[HeRetiK]

Well, I have just learned about this attack today through this thread. I didn't even know it was possible.
I just found out that it's also known as the Majority attack. It's actually happened a couple of times. I dunno how I missed knowing about it before

- Fool’s Gold? Bitcoin Fork Faces Cryptocurrency Exchange Delisting after 51% Attack
- Verge Suffers 51% Attack, Hard Forks in Response - guess that's why it dumped so badly.
- Researcher Livestreams 51% Attack on Altcoin Blockchain

If anything I have learned to go slow on this Bitcoin hard forks from today

Yep, the smaller a coin the cheaper an attack.

To be more precise, the less a blockchain spends on security in terms of fiat (ie. purchasing power) via block subsidies and mining fees the less an adversary needs to spend to achieve the majority hashrate. This is further aggrevated by the relative ease with which a GPU miner can switch between cryptocurrencies, meaning that there's an abundance of GPU hashing power floating between cryptocurrencies that can be arbitrarily retargeted at smaller coins.

Nonetheless keep in mind that even then 51% attacks make rarely economic sense except for political reasons or to manipulate the markets (ie. there's little to be directly gained from a 51% attack).

[mikeywith]

I don't know whether am on the right board but I need some little help to grasp something.
I have been trying to read about the 51% attack but am having a hard time to understand the part where the attacker can "double spend the coins"

So in a layman's language
1.  What is a 51% attack on the blockchain?
2.  What would happen if someone managed to pull this off say on the bitcoin network?

Anybody well informed about this, I will appreciate your time and help.

I would like to add a couple of  things that the fine gentlmen missed, which i think are very important and most average people don't know these.

The limitation of 51% attack

- the attacker has no way to use any coins that are stored in wallets they have no private key for. thus they are mainly limited to re-using aka " double spend" their own coins ONLY.

-The attacker can not make or create BTC out of no where except for what he they can mine.

- the attacker can not change the protocol rules, for example they can not say , okay block reward is every 10 seconds and block reward is 1000 btc.

- it is nearly impossible to perform such an attack in stealth-mode, every one and their grandmother would know if such an attack is launched on btc.

---------------------------------

if one understands the limitation as well the consequences of such an attack they will release that nobody who poses enough hashing power will even think of deploying such an attack, because that much power means a shit load of money invested, and as someone here mentioned that such an attack on BTC will sink it's value therefore taking the attacker to rekt city as all of their hashing power + whatever BTC they have will be worthless.

[Xivibe]

The examples you are all mentioning, are they specifically for POW?

Or is the principle the same for POS?

[jackg]

The examples you are all mentioning, are they specifically for POW?

Or is the principle the same for POS?

I'm not entirely sure about pos but if someone has a 51% stake, why would you want to do anything dishonest with the currency? Doing anything dishonest with it might mean the value of your stake will significantly go down. Holding 51% of a currency is risky anyway as it means you have a lot of power over it and you might accidentally manipulate the market.

[bones261]

The examples you are all mentioning, are they specifically for POW?

Or is the principle the same for POS?

I'm not entirely sure about pos but if someone has a 51% stake, why would you want to do anything dishonest with the currency? Doing anything dishonest with it might mean the value of your stake will significantly go down. Holding 51% of a currency is risky anyway as it means you have a lot of power over it and you might accidentally manipulate the market.

     The only reason that I can see is that the person holding the 51% of the stake is when they see that their is enough liquidity for them to dump the vast majority of their coins, twice. They can first send their coins to one enchange, dump. And then in short order they can introduce their new chain, double spend the coins by sending to another exchange or even the same exchange and dumping the coins again. I was involved in a Igotspots coin, where someone did just that. However, I think the main problem with the Igotspots coin is that he had made it that you needed a minimum stake weight in order to stake, which caused the difficulty to plummet. There may have been more problems involved.

[jackg]

The examples you are all mentioning, are they specifically for POW?

Or is the principle the same for POS?

I'm not entirely sure about pos but if someone has a 51% stake, why would you want to do anything dishonest with the currency? Doing anything dishonest with it might mean the value of your stake will significantly go down. Holding 51% of a currency is risky anyway as it means you have a lot of power over it and you might accidentally manipulate the market.

     The only reason that I can see is that the person holding the 51% of the stake is when they see that their is enough liquidity for them to dump the vast majority of their coins, twice. They can first send their coins to one enchange, dump. And then in short order they can introduce their new chain, double spend the coins by sending to another exchange or even the same exchange and dumping the coins again. I was involved in a Igotspots coin, where someone did just that. However, I think the main problem with the Igotspots coin is that he had made it that you needed a minimum stake weight in order to stake, which caused the difficulty to plummet. There may have been more problems involved.

I didn't expect something so dramatic. Surely if it got accepted on one exchange, they'd just be happy with the profit they could make... It's less scammy than stealing from an exchange.

As in, say the coin was worth 100 SATs and there was a 40% backlog to push it down to 10sats then you can list your buy order at about 8 sats, put the 40% in and sell it and then make the price fall so you can increase your stake... It's still scamming but it's a bit nicer than taking everything from one person individually and it's the issue of the lack of regulations of the currency, someone can dump it at any point...

[bones261]

The examples you are all mentioning, are they specifically for POW?

Or is the principle the same for POS?

I'm not entirely sure about pos but if someone has a 51% stake, why would you want to do anything dishonest with the currency? Doing anything dishonest with it might mean the value of your stake will significantly go down. Holding 51% of a currency is risky anyway as it means you have a lot of power over it and you might accidentally manipulate the market.

     The only reason that I can see is that the person holding the 51% of the stake is when they see that their is enough liquidity for them to dump the vast majority of their coins, twice. They can first send their coins to one enchange, dump. And then in short order they can introduce their new chain, double spend the coins by sending to another exchange or even the same exchange and dumping the coins again. I was involved in a Igotspots coin, where someone did just that. However, I think the main problem with the Igotspots coin is that he had made it that you needed a minimum stake weight in order to stake, which caused the difficulty to plummet. There may have been more problems involved.

I didn't expect something so dramatic. Surely if it got accepted on one exchange, they'd just be happy with the profit they could make... It's less scammy than stealing from an exchange.

As in, say the coin was worth 100 SATs and there was a 40% backlog to push it down to 10sats then you can list your buy order at about 8 sats, put the 40% in and sell it and then make the price fall so you can increase your stake... It's still scamming but it's a bit nicer than taking everything from one person individually and it's the issue of the lack of regulations of the currency, someone can dump it at any point...

   Well quite frankly, Igotspots had quite a few people that didn't care much for him. I don't think the only motive was pure profit. (However, they did make away with a tidy sum from Bittrex who was the victim exchange, I believe.)I think they also wanted to destroy another one of his coin. They succeeded.
   One of the main problems with many POS coins, IMHO, is that your really don't need to have 51% of the coins to have 51% of the stake. Many exchanges do not stake the coins, since that is frowned upon. Also, if we were to implement POS on BTC, many people are unwilling to keep their balance on a hot wallet and have their coins in cold storage. I realize that many coins have implemented other forms of POS like dPOS to mitigate this. However, those schemes seem to introduce their own problems, such as overly centralizing the coin.