Of all the possible weaknesses and attacks, there’s one that sits on the throne – the 51% attack.
People have routinely speculated of the fear of an end-of-days situation for Bitcoin, but this time they could be right. Transactions could be stopped from confirming, and some transactions could even be reversed by attackers who hold over 50% of hashing power, potentially undermining the whole project.
The economic incentives and design of Bitcoin were specifically structured to defend it from the potential of a destructive 51% attack. So far this has been successful. But until now, a 51% attack was merely a hypothetical scare story.
Experts indicate that around November 16th a coordinated 51% attack will begin. A 51% attack is when a syndicate of bitcoin miners, who represent over 50% of the Bitcoin network’s hashing power, and a group of allied blockchain startups look to increase block size.
A hard fork is required in this situation, and, while contentious, this is a reasonable thing to desire. This is not an attack in itself.
This consortium’s effort, however, has developed past a straightforward fork. It intends to create a situation in which the outcome is to deliberately stop the continued existence of the chain in its current form.
More accurately, the developers connected are declining to bring in replay protection.
A situation will be created where a 2x fork, with transactions being carried out on 1x fork, maybe “replayed” via the secondary fork. This will cause Bitcoin users to possess funds on both blockchains. However, once a transaction is performed on one blockchain, it could lead to the subsequent blockchain losing the funds.
Replay protection protects users from this risk, however, combine the 2x change with the deprivation of replay protection and what ensues is a massive disruption to the Bitcoin system. The consortium is implementing this strategy by design.
The potential outcome of this attack still remains unclear. Bitcoin could prove resilient to the attack and come out on top. However, if it does not survive the attack, transactions will grind to a halt and faith in Bitcoin will be all but lost.
Hold on to your seats, things could get messy!