Despite the ever-increasing security level of blockchain platforms, there are a number of vulnerabilities and types of attacks capable of undermining a blockchain’s reputation like the 51% attack and the double spending of coins.
But, how real is one of the worst blockchain attacks ever to exist and what technologies are used to prevent it?
A 51% attack on the blockchain can be carried out by a group of miners trying to control more than 50% of the processing power or network hashrate.
Despite the fact that miners are not able to reverse confirmed transactions, create false ones (that have never occurred before), or steal funds from a certain blockchain wallet, they have the opportunity of blocking new transactions or confirming them.
The main thing that helps prevent a 51% attack is the decentralization of miners. The network is safe as long as no one controls more than 50% of the mining power. To date, there are several successful solutions available for preventing 51% attacks. The most interesting and demanded of them are discussed below.
Merged Mining Proof
Merged mining is also well-known as Auxiliary Proof-of-Work. Simply put, it is the process of mining two different (or even more) cryptocurrencies at the same time without sacrificing overall mining performance. If one compares generating hashes during mining with rolling a dice and the blockchain network with some entity, which rewards the player whenever the correct number is rolled, then with merge mining, it is possible to get rewarded simultaneously from multiple entities while rolling the same dice.
Merged mining was first described by Satoshi Nakamoto in 2008. His idea was first implemented in Namecoin and then was used in a list of other projects. There are multiple approaches to organizing merged mining. Merged mined coins always share the same hashing algorithm. Miners collect profits from mining both or more chains. However, this profit is not necessarily the same on both chains.
In the Bitcoin pair, most of the profit is collected from the Bitcoin chain. In the Dogecoin and Litecoin chain, the profits are more comparable. In the second case, the hashrates show significant correlation with each other, since the miners often try to mine both of them to maximize their profits.
The research team of the JAX.Network proposed the so-called Merged mining proof (MMP) as a solution to the Scalability Trilemma and security issues like the 51% attack. The project developed a special algorithm that balances rewards among all participants in a proportional manner for their contribution to maintaining the network.
The key to solving security issues by implementing MMP, especially when it comes to the 51% attack, is JAX.Network nodes which have a special agreement on how to perform merged mining. The set of shards in JAX.Network is in one-to-one correspondence with the set of leaves of the Shard Merkle Tree and it is allowed to merge-mine the shard block only on the leaf of the Shard Merkle Tree, which corresponds to this shard.
The blocks that are merge-mined in the wrong place should be rejected during block verification within the shard. MMP construction allows establishing a simple way of proving that a certain shard was not mined.
In 2018, news appeared on the internet about the so-called ChainLocks technology that could prevent a 51% attack. According to its developers, the 51% attack issue can be solved by relying on the Masternode network and the work of miners based on the PoW (Proof of Work) consensus.
The pioneer of ChainLocks technology is Dash. Its CEO, Ryan Taylor, highlighted the secure features of the implemented solution:
“The cost to attack the Dash network exceeds even that of Bitcoin because of recently introduced security enhancements. Dash has been grinding away developing real-world use cases as well, quietly increasing our transactions and becoming a leader in actual real-world use cases. ChainLocks technology also reduces transaction time and consequently the time required to confirm transactions.”
The idea of ChainLocks is to perform a verifiable network-wide vote of the “first-seen” rule: Long Living Masternode Quorums (LLMQs) that are able to perform BLS threshold signing on arbitrary messages, are chosen for each block and in case of signing the same message by a certain number of chain participants (at least 60% of all members), it will be possible to create a P2P message and propagate it to all nodes in the network.
dPoW – Delayed Proof of Work
One more interesting solution was found by Komodo developers who released a universal solution that fits all cryptocurrencies with low hashrates on both PoW and PoS algorithms back in 2018. The solution is based on the following algorithm: once the Komodo block state is registered in the Bitcoin blockchain, it can’t be changed anymore.
Proof-of-Work consensus algorithms are more resistant to 51% attacks by their nature and could become even more secure with a mechanism that detects indicators of 51% attacks and hinders them.
Despite the integration of existing solutions into many blockchains, a 51% attack is still an actual risk to any young blockchain without substantial diversification to its hashing power, while more mature networks are less prone to these types of attacks largely due to the high costs, and, as a consequence, the low expediency of such an attack.