What Is 51% Attack?

In networks that use Proof of Work, the chain containing the most work is considered valid. An attacker holding a majority of the hash rate can secretly build an alternative chain and, once it overtakes the honest chain, publish it to invalidate recent blocks. This allows them to spend the same coins twice (double spending) or prevent certain transactions from being included in blocks.

Because the attacker does not hold other people's private keys, they cannot steal their coins, create new coins in violation of the rules or change the protocol rules. In a typical scenario, the attacker deposits coins on an exchange, converts them into another asset and withdraws it, then publishes the alternative chain that does not contain the deposit. Relatively small Proof of Work networks such as Ethereum Classic and Bitcoin Gold have been hit by such attacks in the past.

On large networks, the hardware and energy cost of this attack is very high; moreover, a successful attack can reduce the coin's value and thus the attacker's profit. In Proof of Stake networks, a similar threat requires control of a large share of the staked assets and is deterred by penalties such as slashing. Exchanges waiting for more confirmations on large deposits is another precaution against this risk.