Bitcoin Explained : PART 5 : Types of Attack

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In this post, I will describe two types of attacks on the bitcoin network, Replay attack and 51% attack. I think It’s very important to understand these attacks to have a complete picture of how the network works. 

Replay Attack

The replay attack is a type of attack that occurs during hard forks. After a hard fork, we end up with two split networks that share the same history. It means that if you owned five coins before the fork, your private key controls five coins on both split networks. You have five coins in network A and 5 coins in network B. The transaction in network A can be replayed in network B and make you spend coins in the network without your consent. 

We can solve the issue by implementing some kind of replay protection. We can make the transactions in the new network different so they won’t be accepted in network A. That’s how it works for Bitcoin Cash network.

51% Attack

In the bitcoin network, we measure power with hash rates. The more hashing power you have the more likely it is that you will mine the next block and build the blockchain. If you have the majority of the hashing power you will build the longest blockchain and no one can beat you. That means you can include whatever transactions you want into the blockchain. You can make it confirmed because you control the majority of the hashing power.

From my point of view, it’s very unlikely that this attack would happen one day. The miners are incentivized enough to play by the rules and secure the network. Conducting such an attack would be extremely expensive and worthless. Even if one succeeds to accumulate that much hashing power to kale over the network, for the sake of argument, the bitcoins will become worthless. Because I believe that the bitcoin network derives the majority of its value from the fact that it’s very secure and impossible to hack.

With this last part, we have just finished the series about how bitcoin works. In the next post, I will start a new series about Ethereum.

Omar

Passioned about finance, Investing and technology, I would like to share, through this blog, my opinions and financial analysis of companies, projects and the new technologies I believe in.

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