What Is a 51% Hash Attack -- and Are You Vulnerable?
When it debuted, Bitcoin (CRYPTO: BTC) was considered innovative as the world's first secured peer-to-peer electronic cash payment system. Its most striking features (compared to other digital money predecessors) were its cryptography and verification process. Without these, Bitcoin would be nothing more than a string of code anyone could copy and paste -- which would quickly break down trust.
But its novel process for confirming transactions, called proof of work, also has its drawbacks. If an entity, like a government, took control of 51% of the network's hash rate, or mining computational power, it would be able to reverse transactions, block new transactions from taking place, and more. It's not just Bitcoin; altcoins that use a PoW consensus mechanism, such as Ethereum Classic and Bitcoin Gold, have all suffered 51% attacks in the past. So how concerned should you be?
Image source: Getty Images.
Source Fool.com
