What is a 51% Attack? 1 301

With the constant talk about the blockchain being immutable, one could be forgiven for thinking that it is, in fact, impossible to alter a transaction made on the blockchain. There are, however, certain circumstances in which this is not entirely true. And one of them is called a 51% attack.

51% Attack Explained

Bitcoin and other cryptocurrencies are produced by miners who contribute their computing power and technical expertise to the network. Since the blockchain is run by consensus, in which there is no centralized owner, a 51% attack is when an individual miner (or group of miners) manages to control more than 50% of a network’s computing power.

This would allow the miner (often referred to as a bad actor) to disrupt the network and rewrite history if they so desired, making the blockchain, in fact, mutable.

So, The Blockchain is Insecure Then?

Most cybersecurity experts agree that the blockchain is to all intents and purposes the most secure technology the world has ever seen. Thanks to its decentralization, there is no single point of failure, in which one database could be hacked. There is also no way of tampering with records without rewriting the whole network, unlike our current system, in which transactions can be modified an unlimited amount of times.

But, there is the potential for a 51% attack.

Why aren’t people more concerned about such a threat? Mainly, because if we’re referring to a massive network like Bitcoin, because it’s night impossible to pull off.

To gain the majority of such a gigantic network, the perpetrator would need vast sums of money, mining hardware, and electricity to do it. As more and more miners join the Bitcoin network, they bring their computational power with them. And 51% of the computational power of the Bitcoin network is rather a lot, to say the least.

And in actual fact, all they would achieve in doing so is devaluing the currency, which would leave them with less money than the fiat currency they had invested in the attack. So, the financial incentive to carry out such an attack is simply not there. The benefit of carrying out a 51% attack then, is significantly outweighed by the cost and logistical hassle.

Other Cryptocurrencies and a 51% Attack

Altcoins are more susceptible to a 51% attack, as they are not as mature nor have as much computational power as bitcoin. But there are responses to a 51% attack that a cryptocurrency under attack can apply. The most common is known as a “hard fork.” Forking is essentially another way in which the blockchain can be changed and history rewritten, but it is done with the consensus of the majority.

For example, Ethereum decided to hard fork its entire chain to recover after the DAO ‘hack’ in 2016. The majority of Ethereum miners created a fork to keep the blockchain’s history intact, but erase the hack and make it look as if the DAO attack never happened.

This led to a split among those who were not in agreement, and the emergence of Ethereum Classic, which trades at a fraction of Ethereum as we all know it. While purists are against the notion of forking to right a wrong (believing that the “code is law”), forking is starting to become common practice. Had it not been for forking, after all, Ethereum would surely have collapsed.

Similarly, a recent possible 51% attack on the Verge network produced uncertainty and concern about this privacy-oriented cryptocurrency. Close to $1 million of the currency was stolen as one single miner was able to trick the system into thinking it had the consensus. While the Verge team claim to have the “bug” under control, it’s more than likely they will have to carry out a hard fork to prevent attacks like this from happening in the future.

So, just when you thought you were getting your head around the blockchain and getting to know its undisputed qualities, you found out there’s more to this beast than meets the eye. The blockchain is not, in fact immutable. However, the chances of a 51% attack on a major network are smaller than an ant moving a mountain.

Previous ArticleNext Article
Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Freelance Terrorist Carried Out Hundreds of Bomb Threats in Exchange For Bitcoin 41 304

An American-Israeli teen is sentenced to a decade in prison after a Tel Aviv court convicted him for a series of fake bomb threats he carried out in exchange for Bitcoin.

The 19 year old began making threats professionally at the age of 16. He is convicted only for crimes committed while over the age of 18. These include making false threats and reports, extortion, money laundering, and conspiracy to commit a crime.

While the Israeli courts withheld the defendant’s identity because some of his alleged crimes occurred while he was a minor, the Guardian identified him as Michael Kadar at the time of his arrest. He was originally indicted for over 2,000 bomb threats, carried out between 2015 and 2017.

Kadar Targeted Children and Jewish Community Centers

The targets of Kadar’s threats included Jewish community centers, the Israeli Embassy in Washington DC, elementary schools, shopping centers, hospitals, law enforcement agencies, airports and airlines.

A threat to an El-Al flight resulted in the deployment of fighter jets for an escorted emergency landing; another threat to a Canadian airport left six people injured during emergency disembarkment; a Virgin flight dumped eight tons of fuel before landing because of a threat; and another threat went to a plane carrying the Boston Celtics.

Kadar also targeted Republican Delaware state senator Ernesto Lopez, who he threatened with blackmail and the murder of his daughter. After Lopez ignored the demands, Kadar ordered drugs to have sent to Lopez’s residence.

Dealing Terror From Mom and Dad’s Apartment

His reign of terror operated from his parent’s fifth floor apartment near the beach in a posh neighborhood in Ashkelon, about 30 miles south of Tel Aviv. But his threats landed in over a dozen countries, including Ireland, New Zealand, Germany, Denmark, Great Britain, Belgium, Australia, Norway, Argentina, Israel, the United States, and Canada.

“One can easily imagine the terror, the fear and the horror that gripped the airplane passengers who were forced to make an emergency landing, some of whom were injured while evacuating the plane,” read the verdict by judge Zvi Gurfinkel, “and the terrified panic caused when there was a need to evacuate pupils from schools because of fake bomb threats.”

The Judge also divulged Kadar’s fees for his services: $40 for a threatening phone call to a private residence, $80 for a bomb threat to a school, and $500 for an airplane scare. Kadar operated on the dark net and disguised his IP address, using a powerful self-installed antenna to tap into remote networks, and software to mask his voice. According to an indictment filed against him in Florida, he spent some of his calls going into graphic detail threatening the deaths of children in American Jewish centers.

A Small Fortune in Bitcoins

At the time of his arrest, Kadar had amassed around 184 Bitcoins for such services—about half a million dollars at the time, and closer to $680,000 today. He also dealt in bomb making manuals, drugs, and child pornography.

Kadar is the son of an American mother, and his father is an Israeli engineer, and has dual citizenship. The US Department of Justice has also indicted Kadar for 32 crimes, including hate crimes, cyberstalking, giving false information to the police, and making threatening phone calls to around 200 institutions. A separate indictment also accuses Kadar of threatening the children of a former CIA and Pentagon official with kidnapping and murder, and links him to over 245 threatening calls.

When Kadar was arrested, he tried to escape by grabbing a pistol from a police officer, but was wrestled to the ground. Thursday’s conviction follows a cooperative investigation by the FBI and Israeli authorities, who have not been able to recover Kadar’s Bitcoins.

Teen’s Mother Calls Conviction ‘Cruel’

Kadar’s mother spoke outside the courtroom after her son’s sentencing, saying “This is the most cruel, cruel thing in the world. I’m very sorry, but I am ashamed that the country acts this way.” She insisted that her son needed treatment, not prison.

In an earlier interview she told Israeli TV her sun was suffering from a brain tumor, which made school difficult for him. Because of this and his autism, Kadar was homeschooled.

Defense lawyer Shira Nir said these conditions made Kadar unfit to stand trial, as he could not distinguish right from wrong. A medical panel confirmed the defendant’s autistic condition, but concluded he was capable of understanding the consequences of his actions. Judge Gurfinkel said Kadar’s conditions were taken into account, lessening the sentence from 17 years in prison to 10.

Kenya Looks to Blockchain for Affordable Housing Project 8 255

The “Silicon Savannah” is moving deeper in direction of tech. The Kenyan government has announced a plan to manage the property allocation and funding of 500,000 affordable housing units with blockchain technology.

The units, which the government aims to build by 2022, will be set aside for households with an annual income below 100,000 Kenyan Shillings, about $990 USD. The World Bank estimates Kenya’s gross national income per capita at $1,290, according to Business Daily.

Blockchain will help ensure that the affordable housing is in fact going to those who fall below the average income bracket. Land title fraud has caused problems for Kenyans, as land grabbers target homes and even schools for illegal sales and development. Blockchain’s ability to store verifiable proof of title could help safeguard against fraudsters.

“Kenya will use blockchain technology to ensure the rightful owners live in government funded housing projects,” said Principal Secretary of Housing and Urban Development Charles Hinga, speaking with the World Bank on Monday.

Hinga said the plan will be financed by the National Housing Fund, which will raise over $59.5 million per month to get the project underway. But Cabinet Secretary for Transport, Infrastructure, Housing and Urban Development James Macharia said it will take $31.7 billion to build a million homes, each of which will cost between $3,000 and $30,000. Macharia called for support from private sector financing.

Under the financing plan, working Kenyans will contribute 1.5 percent of their salary, which will be matched by their employers. “On affordable housing one should not spend more than 30% of their disposable income for housing,” Hinga tweeted yesterday. “Anything above 30% is not affordable.”

A Trustless Relationship Between People and Government

The initiative represents a considerable push to solve housing and title problems for the nation’s lower income families. But how will the government decide to whom the housing units will go? With so much talk about financing underway, people are already calling on the government to outline a plan for how they’ll distribute the affordable housing units.

The government will need to deliver the housing projects in a time when, Hinga acknowledges, the public is skeptical. Earlier this year $78 million went missing in a corruption scandal involving the National Youth Services. Where there is little trust between the people and their government, Kenya hopes to establish transparency through the blockchain’s distributed ledger system.

Kenya’s Move Toward Tech

In March, Kenya’s Ministry of Information, Communications and Technology appointed a blockchain taskforce to explore the ways the nation could use blockchain technology in the public and private sectors. They called it the Distributed Ledgers and Artificial Intelligence taskforce, and by September its chairman, Bitange Ndemo, was calling on the government to tokenize the economy.

Ndemo also proposed government implementation of blockchain to certify the authenticity of retail goods, so consumers can be sure of where their food is coming from, for example.

Governor of Kenya’s central bank Patrick Njoroge has also voiced support for the use of blockchain technology to strengthen service delivery, although he’s opposed the use of tokens and digital currencies.

But the affordable housing initiative could be the Kenyan government’s first real world implementation of the blockchain.

Most Popular Topics

Editor Picks