Rewriting a blockchain takes more than half its mining power. A miner who controls over 50% of a network’s hashing power can, on average, grow a longer chain than everyone else combined. The network accepts the longer chain, so that miner decides which recent transactions count.
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A blockchain is a shared ledger that the machines processing payments build and hold between them. Its job is to stop anyone spending the same token twice. Wired puts the catch plainly: that guarantee holds only until someone takes over at least 51% of those machines.
What the attacker actually does
In October 2018 a researcher using the name GeoCold set out the method step by step for BleepingComputer. It needs two copies of the same wallet on two servers.
- Cut one server off from the network and use it to mine in private.
- On that hidden copy, send coins from one of your own addresses to another you also own.
- Mine on the hidden copy with more than half the network’s hashing power, so its chain grows faster than the public one.
- On the public copy, send the same coins to an exchange, trade them for another currency such as bitcoin, and withdraw it.
- Reconnect the hidden server.
The rest of the network sees a longer chain and adopts it. That chain holds a payment that clashes with the one sent to the exchange. The nodes keep the payment on the longer chain and drop the other. The attacker keeps the coins and the withdrawal.
That is a double spend. The attacker won by outmining the honest miners, not by breaking any code.
How much control is enough
The threshold is a majority of hashing power. GeoCold said his team reached about 70% of the Bitcoin Private network during a livestream. Twitch and a second streaming service banned the stream before he finished. He told BleepingComputer he wanted to show how exposed small coins are to such attacks.
Size is the defence. Wired reports that large projects had not seen a successful takeover, partly because buying enough computers to outmine everyone else costs so much.
What else a majority can do
Rewriting history is not the only power. Ars Technica lists more:
- spend the same coins twice
- reject other miners’ transactions
- demand higher fees from people with large holdings
- mount a denial-of-service attack on the whole network
Ittay Eyal, a researcher at Cornell, told Ars that a 51% holder becomes a monopoly that could block every transaction but its own.
When it has happened
In June 2014 Cornell researchers found that one bitcoin mining pool, GHash, had repeatedly supplied more than half of the network’s hashing power. On June 12 it held the majority for 12 hours straight. It was the first time in bitcoin’s five years that one party had done so. Cornell professor Emin Gün Sirer said there was no evidence GHash had used the power. He argued that its mere position broke the idea of a currency nobody controls.
Wired reported in January 2019 that the exchange Coinbase had detected double spends on Ethereum Classic. Coinbase security engineer Mark Nesbitt counted 12 of them, worth about $1.1 million in total. He told Wired the company was very confident an attacker held over half the network. Coinbase and Kraken both paused Ethereum Classic transactions. Ethereum Classic then had a market value of about $553.5 million, against $67.5 billion for bitcoin.
Can the damage be undone
Only by people, not by code. Wired notes that the Ethereum Classic developers could issue a new version of the chain that reverses the double spends. Users would then have to choose to run it.
That choice has history. Ethereum Classic exists because its founders refused to alter the Ethereum ledger after a 2016 theft of about $50 million from the DAO. Reversing an attack would mean doing the thing the project was created to refuse.
