What is the definition of 51% Attack in finance

A 51% Attack is an attack on blockchains usually by a single miner or a group of miner. The attack gives the attackers control over half of the computing power or harshrate securing a blockchain. With this privilege, the attacker would be able to control the confirmation of new accounts and transactions and also reverse the completed transactions to separate accounts.  

The attackers would also be able to prevent the confirmation of new transactions such that payment for some users is stopped. The ability to reverse completed transactions give them the opportunity to double-spend coin. The name 51% attack defined the amount of control the attackers would have over the blockchain.

Although a 51% attack is very deadly and highly damaging, it does not allow the attackers to have accessed to old blocks or produce new coins. Hence, the attack does not destroy a blockchain-based currency or bitcoin.

Breakdown of 51% Attack.

Bitcoin is one of the cryptocurrency that the blockchains (a type of distributed ledger) work with. All transactions made on a cryptocurrency network are kept on the digital files and are made accessible by all users and the general public for inquiries, up to date information and reviews. This implies that users cannot spend bitcoin twice. However, a private blockchain does not offer this privilege. In private blockchain, the general public is prevented from viewing the blockchain data.

Blockchain is simply a collection of blocks arranged in a chain, the blocks are used in recording all completed transactions within the stipulated time or duration. Usually, in bitcoins, new blocks are produced every 10mins. Once this is completed, no change can be made. In fact, when a visitor tries to alter this, the network users can easily detect and reject a fake version of the ledger.

Since the network is used in carrying out the process of computing powers, a group or single attacker can interrupt the process of recording newly computed blocks. When this occurs, the attackers earn their reward by monopolizing the mining of new blocks. As a result, miners encounter difficulty whenever they want to complete blocks. The rate of reward earned in bitcoins is 12.5 newly created bitcoin.

The attackers also have the power to block user's transactions, send and reverse transactions such that it seems they are still in custody of the coin they just spent. This risk is what is referred to as "double spending, "

Double spending is the digital representation of counterfeit or fake coin, the major cryptographic error that led to the introduction of blockchains. When double-spending occurs, the networks suffer a great loss of user confidence.

Transaction lock before the occurrence of a 51% attack is usually very difficult to open and change. The farther the time the transaction was locked, the more difficult it is to alter. A 51% attack can occur when the network for mining power is less than 50%. Companies using Bitcoins for their trade and have encountered the 51% attack include Krpyton and Shift, and Bitcoin Gold.