Why the 51 Percent Attack Rule is a Misnomer
As ingenious as bitcoin is, the cryptocurrency still retains a few weaknesses. In particular, it remains vulnerable to attack when any mining pool comes close to controlling a majority of the overall network hashrate. Indeed, the phrase “ 51 Percent Attack” has become popularized to denote such an attack. With that amount of control, an attacking group can double spend, freeze out other miners, quietly blacklist addresses, and even shutdown transaction processing entirely.
However, as Blockstream Co-Founder Matt Corallo has noted, pulling off a such an attack may not even require 51% control of the network hashrate. Indeed, Corallo believes that 45% control of a network hashrate might suffice. At that rate “their likelihood of winning — if they are trying to mine a fork or six blocks or whatever — is pretty damn high. It’s all just a probability.” Having higher hashing power simply enables the attacking group to modify more past blocks & control more future blocks on the blockchain.
If 45% hashrate control is feasible for an attack, just how much hashing power is needed to pull off an attack? “Statistical models have shown that attacks on the consensus mechanism, under certain circumstances, can occur with as little as 30% of the hashing power” (Florian Hansmann). Given the right circumstances, this small but problematic vulnerability has the potential to fully undermine bitcoin governance.
Recent History: A Harbinger of Things to Come?
Is the concept of a 51 percent attack merely theoretical? Recent history suggests that this particular vulnerability might encourage a future power grab. We saw the outlines of such a possibility take shape earlier this year with the Segwit controversy. What might happen when the stakes are higher – and a bitter dispute over bitcoin governance gets out of hand? Consider the all-but-ready scheme Bitcoin Unlimited contemplated earlier this year:
Before SegWit, Bitcoin Unlimited’s Peter Rizun considered a type of 51 percent attack on a minority of miners as a legitimate form of “anti-split protection”. That is, a means to defeat the original blockchain in favor of a new chain with the capability to mine larger blocks. For Rizer, such a scenario might come to pass if a majority of hash power indicated support for Bitcoin Unlimited’s position in this matter. With controlling hash power, the majority supporting Bitcoin Unlimited could conceivably reject any blocks which did not indicate similar support. As Rizer puts it:
“Miners will orphan the blocks of non-compliant miners prior to the first larger block to serve as a reminder to upgrade. Simply due to the possibility of having blocks orphaned, all miners would be motivated to begin signaling for larger blocks once support definitively passes 51%. If some miners hold out (e.g., they may not be paying attention regarding the upgrade), then they will begin to pay attention after losing approximately $15,000 of revenue due to an orphaned block.
While unsuccessful, this scenario might prove more probable if international conflict breaks out between large nation states (say, between China and the US).
Full Protection Against A 51 Percent Attack
Eliminating the risk of a 51 percent attack requires moving beyond the need for mining and securing a hack-proof network. In contrast to Proof-of-Work and Proof-of-Stake algorithms, XtraByte’s Proof-of-Signature consensus and network design offers full protection against a 51 percent attack.
The foundation for this protection flows from XtraBytes decentralized node network. Comprised of 3584 ‘STATIC’ (Services, Transactions, and Trusted in Control) nodes, XtraBytes issues transactions fees to its STATIC node owners rather than to miners. Network security is dependent upon these STATIC nodes signing each transaction block (thus, the name Proof-of-Signature). A private virtual network interconnects these online STATIC nodes, creating VPN-like functionality for the nodes.
Here is how the XtraBytes non-technical whitepaper puts it:
With Proof-of-Signature requiring that every node sign every transaction, the entirety of the STATIC node network would need to be compromised simultaneously to undermine the integrity of the blockchain. Furthermore, by leveraging the use of digital signatures extensively in security algorithms, the XtraBytes developers go several steps further than SSL and Microsoft’s signed software to ensure the security of the signature protocol…
…if a signature is compromised, the associated [node network] signature will automatically be revoked as the consensus among nodes has been violated. The owner of the affected node is then warned to generate a new signature before the node can resume participation of the network…
…If a disruptive agent attacks and disables a STATIC node, one or more of the other STATIC nodes will take control of the virtual node until the original STATIC node has been brought back online. The transmissions between the STATIC nodes to verify consensus are always protected by encryption
The XtraBytes team has created system of real and virtual networks that is impervious to a 51 percent attack. The system relies upon trust and signature verification. Its simplicity is its strength!