Table of Content
- What are Network attacks
- Types of Network attacks
- How to protect yourself?
In the last article, we covered various Consensus Mechanisms. We talked about how some are prone to network attacks like 51% attacks, Sybil attacks, etc.
This article shall cover the different network attacks that can take place and how you can stay protected from them.
What are network attacks?
A network attack attempts to disrupt or manipulate the network's normal functioning. Some examples of network attacks are double-spend attacks or even Sybil attacks. These attacks can pose severe threats to the network's security and integrity.
Network attacks can be harmful to cryptocurrency networks in several ways. Some attacks, such as denial of service attacks, can disrupt the normal functioning of the network and make it difficult or impossible for legitimate users to access it.
Other attacks, such as double-spend attacks or attempts to subvert the consensus process, can undermine the security and integrity of the network. For example, suppose an attacker can successfully double-spend cryptocurrency units. In that case, it can erode confidence in the network and lead to losses for users who accept the units as payment. Similarly, suppose the consensus process is compromised. In that case, it can lead to conflicting transactions or blocks being added to the blockchain, which can create uncertainty and undermine the trustworthiness of the network.
Overall, network attacks can have severe consequences for the stability and security of a cryptocurrency network and can impact the value of the assets supported by the network.
With all that being said, let's dive into each network attack and the steps you can take to reduce risk and prevent such attacks from affecting you and your money.
Types of Network Attacks
A 51% attack is a type of network attack that occurs when a single entity or group of entities controls more than half of the network's computing power or hash rate. It gives them the ability to manipulate the network in several ways, including:
- Double-spending: With over half of the network's hash rate, an attacker can create conflicting transactions or blocks and potentially spend the same cryptocurrency units more than once.
- Blocking transactions: An attacker with 51% control of the hash rate can prevent certain transactions from being added to the blockchain, potentially causing delays or losses for the affected users.
- Reversing transactions: An attacker with 51% control of the hash rate can reverse recent transactions by creating a new blockchain version that does not include those transactions.
It is a type of network attack that involves an attacker attempting to spend the same cryptocurrency units more than once. It can be done in several ways but typically involves the attacker creating conflicting transactions or blocks broadcast to the network.
In a traditional financial system, double-spending is prevented by using a centralized authority that verifies the validity of transactions. However, in a decentralized cryptocurrency network, there is no central authority to validate transactions. Instead, the network relies on consensus mechanisms to agree on the state of the blockchain and prevent double-spending.
Suppose an attacker can successfully execute a double-spend attack. It can undermine the security and integrity of the network, as it can create uncertainty about the validity of transactions and the overall state of the blockchain.
As such, double-spend attacks are considered a significant threat to the stability of cryptocurrency networks and are actively guarded against by network participants.
A Sybil attack is a type of network attack that involves creating multiple fake identities or nodes in a network to gain disproportionate influence or control. Any entity can create multiple accounts or nodes controlled by a single entity or create fake accounts or nodes that no one controls.
In a decentralized network, any entity can use a Sybil attack to manipulate the consensus process or disrupt the normal functioning of the network.
For example, an attacker could create many fake nodes and use them to vote on a particular decision or block, potentially swaying the outcome in their favor. Alternatively, an attacker could use fake nodes to flood the network with traffic, disrupting the normal flow of transactions and potentially causing delays or losses for legitimate users.
Network participants must be vigilant in identifying and addressing potential Sybil attacks to protect the network from this type of attack.
An Eclipse attack involves an attacker taking control of a victim's connections to the network to manipulate their view of the network and potentially trick them into making malicious or unintended actions.
An entity can use an eclipse attack to manipulate the victim's view of the network by selectively blocking or altering their connections to other nodes. It can prevent the victim from seeing certain transactions or blocks, potentially tricking them into making decisions based on incomplete or misleading information.
For example, an attacker could use an eclipse attack to prevent a victim from seeing a particular transaction and trick the victim into making a conflicting transaction from which the attacker can benefit. Alternatively, an attacker could use an eclipse attack to block a victim's connections to the rest of the network, preventing them from participating in the consensus process or making transactions altogether.
A front-running attack is a type of network attack that involves an attacker using insider information or privileged access to make trades or transactions that are likely to profit from the actions of others.
Front-running attacks can be challenging to detect and prevent, as there is no central authority to monitor and regulate the network. Instead, network participants must rely on the transparency and openness of the network to detect and prevent front-running attacks.
For example, an attacker with privileged access to the network, such as a miner or validator, could use that access to make trades or transactions that are likely to profit from the actions of others. This normally happens when an entity normally a miner, who has access to information on pending transactions, places an order that would earn him a profit based on a pending trade.
A routing attack is a type of network attack that involves an attacker manipulating the routing of data or traffic within a network to disrupt the normal functioning of the network or achieve some other malicious goal.
A routing attack could involve an attacker manipulating the routing of transactions or blocks within the network to disrupt the normal flow of data or cause delays or losses for legitimate users.
For example, an attacker could use a routing attack to redirect transactions or blocks away from their intended recipients or to prevent them from being added to the blockchain.
Routing attacks can be challenging to detect and prevent, as they often involve manipulating the underlying infrastructure of the network rather than the data or transactions themselves. Network participants must be vigilant in monitoring and protecting the routing of data within the network to prevent this type of attack.
Selfish Mining Attack
Lastly, we have Selfish mining. Selfish mining is a type of network attack involving an attacker withholding newly mined blocks from the network to gain an advantage over other miners. In a decentralized cryptocurrency network that uses proof-of-work as its consensus mechanism, miners compete to solve complex mathematical problems to create new blocks and earn rewards.
An attacker using the selfish mining strategy will not immediately broadcast newly mined blocks to the rest of the network but will keep them to themselves and continue mining on top of them. It allows the attacker to earn more rewards, as they have a head start on other miners still working on the previous block.
However, the selfish mining attack can also negatively affect the network's security and integrity. By withholding blocks from the network, the attacker can create confusion and potentially cause delays or losses for legitimate users. In addition, the attacker risks damaging their reputation and trust within the network if their actions are detected.
How to protect yourself from it?
There are a few ways you can protect yourself from such network attacks:
Use a decentralized exchange
Instead of holding your cryptocurrency on a centralized exchange, consider using a decentralized exchange or DEXes to trade and store your assets. DEXes do not hold your assets in custody and are hence resistant to several attacks.
Swap your tokens on Solana via app.goosefx.io/swap
Use a multi-sig wallet
A multi-sig wallet requires multiple parties to sign off on transactions, making it more difficult for a single entity to control your assets.
Diversify your holdings
One way to mitigate the risks of network attacks is to diversify your holdings across multiple networks. This way, if one network is subjected to any major network attack, your other holdings may still be secure.
While the collapse of FTX wasn't a network attack, it sure does drive the point of diversifying your holdings!
"Never keep your eggs in a single basket"
Keep an eye on the distribution of mining power within the network as well as the hash rate distribution of the network. It is a red flag if the distribution of them becomes heavily concentrated in the hands of a few parties and you should remove the funds from the network as soon as possible.
Connect to multiple mining nodes
By connecting to multiple mining pools or nodes within the network, you can ensure that you have a more diverse and robust view of the network. This can help to protect you from several attack like selfish mining or robust that targets a single pool or node.
Contact the network
If you suspect any network attack is occurring, contact the network's development team or community for updating them on your findings and for guidance on how to protect your assets.
Another way to prevent double-spending attack is to wait for a certain number of confirmations on the blockchain before considering the payment final. This helps to ensure that the transaction cannot be reversed or double-spent.
Network attacks in crypto are a severe concern to traders, investors, and users of cryptocurrency. These attacks can take many forms, such as 51% attacks, double spending, Sybil, eclipse, front-running, routing, and selfish mining attacks.
Even though these types of attacks are severe and can cause harm, some measures and solutions have been developed to mitigate their impact and prevent them like using a DEX or multi-sig wallet, connecting to multiple nodes, and remaining informed about the distribution of nodes on a network.
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Disclaimer: The statements, proposals, and details above are informational only, and subject to change. We are in early-stage development and may need to change dates, details, or the project as a whole based on the protocol, team, legal or regulatory needs, or due to developments of Solana/Serum. Nothing above should be construed as financial, legal, or investment advice.