Topic: [2018-01-18] blockgeeks.com: Hypothetical Attacks on Cryptocurrencies (Read 72 times)

In this guide we are going to analyse various attacks that can happen to your cryptocurrency (mostly bitcoin). While it is true that most of the attacks we will talk about are purely hypothetical in nature, we have already seen real life examples of some of the attacks described here (Mt. Gox and Transaction malleability). Before we get started, a huge shout out to the “Game theory and Network attacks” video by “Blockchain at Berkley” for providing the inspiration for the article.
Note: We will be using these two terms a lot in the article below so let’s define it right now:

    Orphan blocks aka orphans: Blocks that couldn’t get added to the main chain despite being successfully mined.
    Hashrate: Basically means how powerful that miner’s computational resources are.

So without any further ado, let’s get started.

 
What are mining pools?

Before we get into the descriptions of various attacks, let’s understand what a mining pool is (in this section we will be talking exclusively wrt BTC). The entire blockchain works because of a network of “miners”. The miners basically “mine” for new blocks in the blockchain by solving complex cryptographical puzzles using their computational power. As a result of this, they get a mining reward which is 12.5 BTC.

Once they successfully mine a block, they gain the power to put in transactions inside the block. That’s basically how transactions happen in all cryptocurrency, a miner puts in the record of the transaction inside the block.

Now remember one thing, there are only a limited number of bitcoins that were created (21 million coins). Satoshi Nakamoto, the creator of bitcoins, envisaged that as more and more miners got in, the rate of bitcoin mining would exponentially increase, so much so that all the available bitcoins could be mined out in a couple of years!
 
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