If more than half the computer power or mining hash rate on a network is run by a single person or a single group of people, then a 51% attack is in operation.
A 51% attack refers to a malicious actor (or group acting in concert), controlling over 50% of the total mining power of the blockchain network
and disrupting its integrity.
Due to the way blockchain functions, consensus
is required for transactions to be confirmed or added. A bad actor who controls the majority of the hashing
power can theoretically "form the majority" in this consensus mechanism and disrupt the integrity of the blockchain by modifying the order of transactions or preventing transactions
from being confirmed, among other things.
The risk of a 51% attack is higher for blockchains with less hashing power, as it is easier for a malicious actor to procure the required majority computing power. The more miners and resources spent mining a blockchain, the safer the blockchain is. The Bitcoin
network is recognized as the safest blockchain in existence as it has the largest amount of hashing power mining it.
The cost of a 51% attack depends on several factors, including the type of blockchain, the difficulty of the hashing algorithm, the cost of electricity and the available hash rate. Generally speaking, the cost of a 51% attack on a given blockchain network can range from thousands to millions of dollars.
51% attacks are theoretically possible in proof-of-stake
(PoS) networks, although they are significantly less likely than in proof-of-work
(PoW) networks. This is because, in PoS, an attacker would need to control most of the network’s staked tokens to gain control of the network, whereas, in PoW, an attacker only needs to control most of the network’s hashing power.
There are some examples of successful 51% attacks in altcoins