What is a 51% Attack – Simplified Bitcoin Tutorial

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You may have heard the term “51% attack”, but what does it actually mean ?

Bitcoin miners use powerful computers to verify that each person who wishes to spend Bitcoins actually has Bitcoins to spend and isn’t trying to fool the system. They do this by reviewing the Blockchain – a digital file that documents every Bitcoin transaction ever made. Miners usually groups together in mining pools so they can combine their mining power and become more efficient.

The power of the miners verification process comes from it’s decentralization. For example, let’s say there’s a transaction that is going through the block chain. Each miners will review this transaction and decide if the sender actually has the bitcoin he wants to send. If the majority of miners rules the transaction is valid it will go through.

But what if someone could get a hold of more than 50% of the network’s mining power and manipulate the system for his own needs. Theoretically speaking, if someone manages to pull off such an attack he can double spend his money – meaning he can pay with the same Bitcoin twice or even more.

The attacker will also be able to prevent transactions from being confirmed and prevent other miners from generating new Bitcoins. But more on double spending and confirmations will be reviewed in later videos.

For now, here’s a real live example of the 51% attack. In January of 2014 one of the mining pools got so big it neared 51% of the total mining power. This of course created some panic in the Bitcoin community but was fixed shortly after by miners who left the pool in order to balance things out.

One of the things to keep in mind is that someone with so much mining power would probably make more money using this power to mine legitimately than by actually blocking transactions or double spending. This reduces the risk for such an attack substantially.

Ofir Beigel

Blogger and owner of 99Bitcoins. I've been dealing with Bitcoin since the beginning of 2013 and it taught me a lesson in finance that I couldn't get anywhere else on the planet. I'm not a techie, I don't understand "Hashes" and "Protocols", I designed this website with people like myself in mind. My expertise is online marketing and I've dedicated a large portion of 99Bitcoins to Bitcoin marketing.

2 Comments

  1. Why take the chance of something that may/may not happen in the future? Every time it happens, we lose value on our bitcoin. Every time we have to move our money in and out of the bitcoin because of our fear. The financial brokers love to see that because every time we move our money, they get a percentage of our money. The implication of 51% attack is bad. Values will be lost over and over again. In the end we will be slaves to the biggest financial institutions: the banks.

    Why don’t we convert our currency to Peercoin? As simple as that. I am just starting to.

    PEERCOIN is shielded from 51% attack, and it encourages decentralization
    by giving minting incentives. It does not consume much electricity too
    because it uses a genius Proof of Stake system. (No one will be
    motivated to kill the network if they have 51% of the stake in it. It
    will be stupid to stab himself.)

    Their design has successfully slowed down the blockchain size increase to 0.6GB after 5 years, compared to 110 GB for bitcoin. This will also make bitcoin more centralized in the future because a full node will need a lot of hard drive space.

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