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Bitcoin Attack

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What Is A Bitcoin Attack?

What Is A Bitcoin Attack?

A Bitcoin attack is when someone launches any number of different cyber attacks against the Bitcoin network or its users.

Some attacks are launched directly against the bitcoin network while others are launched against bitcoin users in an attempt to discover who controls which address.

$5 Wrench Attack

In the world of cybercrime, we’re used to thinking about attacks happening online. A $5 Wrench Attack, as known in cypherpunk culture, is when an attacker bypasses cyber security measures and resorts to physical harm to extract information from a victim. This type of attack highlights the reality that cybersecurity goes beyond the digital realm, and that we must remain vigilant in both the virtual and physical world. These physical threats of violence and coercion can leave victims feeling helpless and vulnerable. It’s important that we not only strengthen our online security measures but also take measures to protect ourselves in our daily lives.

This type of attack emphasizes the significance of personal safety when it comes to cybersecurity. It’s important to remember that threats of violence – even the seemingly absurd $5 Wrench Attack – should always be taken seriously.

You can avoid a $5 wrench attack by not talking too publicly about your own personal bitcoin stack and using a duress wallet.

51% Attack

A 51% attack is a type of attack on Bitcoin that occurs when a group of miners, such as a mining pool, controls more than 50% of the network’s mining hashrate and are able to censor transactions and reorganize the blockchain.

Due to the high costs of bitcoin mining hardware and electricity, it is considered almost impossible to actually perform a 51% attack on the Bitcoin network.

Censoring Transactions

In a 51% attack, the attacking miners would have the ability to omit or “censor” transactions by not confirming them and adding them to the blockchain. This could cause problems for certain types of transactions such as whirlpool transactions or other types of CoinJoins. It could also be used as a tool to omit transactions that are deemed “non-compliant” by governments or central banks.

Block Reorg

Another way that controlling 51% of the hashrate can attack bitcoin is by performing a blockchain reorganization, commonly called a block reorg.

During a 51% attack, the malicious bitcoin miners can go back within the blockchain and begin mining a new chain at a certain block height. This causes a chain split. Since bitcoin nodes recognize the longest chain as the one true blockchain, then the bitcoin nodes will drop the old record and adopt the new record as the longest chain if the new split chain ever becomes longer than the honest chain. This means that any blocks added after the point of divergence are dropped by the bitcoin nodes and effectively erased from the blockchain.

Theoretically, this enables the miners to spend bitcoin in a block and then go back in the blockchain and split the chain with their majority hashpower and effectively erase the block with their spent bitcoin and the bitcoin that they spent would appear back in their wallet as of the transaction never happened. This technically enables the capacity to double spend bitcoin but in the event of a 51% attack, people would be reluctant to accept bitcoin due to fear of having their receiving transaction erased.

Dusting Attack

This attack involves an attacker sending a small amount of sats, also known as dust, to thousands or tens of thousands of previously used addresses in an attempt to link them all together via an address cluster and potentially deanonymize individuals who control them. The goal is to get a wallet to automatically merge multiple dust inputs, thus linking all these addresses together.

You can avoid dusting attacks by using a wallet that supports coin control and generates a new address for every new payment.

Brute Force Attack

A brute force attack is one of the most straightforward and common methods used by hackers to obtain private information. In such an attack, the attacker systematically guesses each and every possible permutation of a password, private key, or pin code until they discover the right combination. Although such attacks used to require a lot of physical energy, modern technology has allowed hackers to deploy more powerful computers to make quick work of such tasks. This is why it’s important to create strong and unique passwords and secure your accounts with two-factor authentication to protect valuable private information.

You can protect yourself against brute-force attacks by keeping your seed phrase private and the use of a password generator that uses upper case, lower case, 0-9, and unique ASCII symbols like !@#$%^&* and more.

You can see the different results of a brute-force attack against a 12 word seed phrase vs. a 24 word seed phrase.

Man In The Middle Attack

A man in the middle attack is a devious strategy used by hackers to intercept information. This type of cyber attack is when someone intercepts and manipulates communication between two people who believe they are directly communicating with each other. The attacker actually acts as a middle man who can learn sensitive information from their victims. By tricking Alice or Bob into thinking they are communicating with each other, the attacker can intercept and potentially steal their messages, passwords, financial information, and other sensitive data.

Race Attack

While there are various ways to attempt double spending, one method that bad actors often use is the race attack. Simply put, in a race attack, the fraudster sends two transactions with the same input, hoping to get one of them confirmed before the other. If successful, the attacker gets away with fraud, as one of the transactions is deposited in their own wallet, while avoiding payment to the recipient. It is a sneaky way of stealing, and as a bitcoin user, being aware of the threat is the first step to protecting your assets.

Sim Swapping Attack

A sim swapping attack occurs when a hacker or bad actor is able to gain access to your phone provider account by swapping out your sim card. Once they have your phone number attached to a phone that they control, they can use your phone number to gain access to SMS-based two-factor authentication services such as centralized bitcoin exchanges and other bitcoin custodians.

You can protect yourself from sim swapping attacks by avoiding using SMS for any sort of 2 factor authentication. If you buy bitcoin from centralized or custodial exchanges, use an alternative form of 2FA such as an authenticator app.

Replay Attack

In short, a hard fork can occur, resulting in the original blockchain splitting into two paths. This means that not only does a new forked coin emerge, but it also presents opportunities for bad actors to take advantage of unsuspecting users. These nefarious individuals can steal funds from the newly forked blockchain by reusing or “replaying” payment data from the original blockchain on the new one.

If you send the new forked coins to someone else, they can broadcast that exact same transaction on the original blockchain and your original coins will be moved from and to the same addresses on the original blockchain as they are on the new forked blockchain. If someone else controls that address, then you lose all of the bitcoin at that particular address.

You can avoid a replay attack by never moving forked coins before you move coins on the original blockchain.

Sybil Attack

A sybil attack involves a single user creating multiple fake identities, nodes, or computers within a peer-to-peer network. Sybil attacks exploit the cost of entry to a network and the ability to create multiple identities for little to no cost. With one user operating multiple fake identities, an attacker aims to gain the majority of influence in the network and thus undermine the authority or power of the system. The attack is made possible due to the low cost of entry for creating multiple identities, which can be operated simultaneously by the attacker. The challenge lies in detecting these fake identities in a network of nodes and validating genuine identities.

The concept of reputation is particularly important here, as nodes in the network must validate each other’s identities to prevent these types of attacks.

DoS Attack

DoS attacks, short for denial of service, and their more nefarious counterpart, DDoS attacks, short for distributed denial of service, have become a familiar attack on Bitcoin. A DoS attack generally involves a single internet connection used by the attacker to overwhelm a server or network with fake requests, leading to congestion and, ultimately, service failure. DDoS attacks go a step further by harnessing a bot-net of devices to generate more traffic to amplify the damage. However, not all DDoS attacks seek to bring down the entire network but instead focus on blocking access to specific servers or services.

Unlike a regular denial-of-service (DoS) attack, which relies on a single internet connection to flood a target with bogus requests, DDoS leverages a network of devices to create a deluge of traffic. The sheer volume of these distributed devices makes it much more difficult to combat. For servers and websites that rely on traffic to survive, a DDoS attack can create serious problems, causing congestion, spam, and even forcing paywalls to go down.

A DDoS attack is essentially a large-scale version of a DoS attack. Instead of using a single internet connection, DDoS attackers leverage thousands, if not millions, of connected devices to flood a network with fake requests, traffic, or spam.

Bitcoin Attacks FAQ

Are you interested in learning more about bitcoin attacks and how to protect yourself from them? We’ve put together a list of frequently asked questions surrounding all of the bitcoin attacks mentioned above.

Can A Government 51% Attack Bitcoin?

The question of whether a government such as Chine, Russia, The United States, etc. can launch a 51% attack on Bitcoin is a valid concern.

In theory, a 51% attack is possible if a government to controls the majority hash rate, meaning they have a large enough energy source to control the confirmation of transactions on the blockchain. This would allow them to dictate which transactions are approved or rejected. However, executing such an attack would require a large energy source and a significant amount of computing power. In a proof of work system like Bitcoin, where the longest chain is accepted as the valid chain, a government attacker could also potentially erase transaction history with a block reorg.

Ultimately, while a 51% attack on Bitcoin is possible, it’s unlikely to occur due to the resources necessary to make it happen. While a government is probably the only entity that has access to the resources necessary to launch such an attack, the resilience of Bitcoin’s network has been robust enough to fight off any attempts so far.