What is a 51% Attack? 1 2769

With the constant talk about the blockchain being immutable, one could be forgiven for thinking that it is, in fact, impossible to alter a transaction made on the blockchain. There are, however, certain circumstances in which this is not entirely true. And one of them is called a 51% attack.

51% Attack Explained

Bitcoin and other cryptocurrencies are produced by miners who contribute their computing power and technical expertise to the network. Since the blockchain is run by consensus, in which there is no centralized owner, a 51% attack is when an individual miner (or group of miners) manages to control more than 50% of a network’s computing power.

This would allow the miner (often referred to as a bad actor) to disrupt the network and rewrite history if they so desired, making the blockchain, in fact, mutable.

So, The Blockchain is Insecure Then?

Most cybersecurity experts agree that the blockchain is to all intents and purposes the most secure technology the world has ever seen. Thanks to its decentralization, there is no single point of failure, in which one database could be hacked. There is also no way of tampering with records without rewriting the whole network, unlike our current system, in which transactions can be modified an unlimited amount of times.

But, there is the potential for a 51% attack.

Why aren’t people more concerned about such a threat? Mainly, because if we’re referring to a massive network like Bitcoin, because it’s night impossible to pull off.

To gain the majority of such a gigantic network, the perpetrator would need vast sums of money, mining hardware, and electricity to do it. As more and more miners join the Bitcoin network, they bring their computational power with them. And 51% of the computational power of the Bitcoin network is rather a lot, to say the least.

And in actual fact, all they would achieve in doing so is devaluing the currency, which would leave them with less money than the fiat currency they had invested in the attack. So, the financial incentive to carry out such an attack is simply not there. The benefit of carrying out a 51% attack then, is significantly outweighed by the cost and logistical hassle.

Other Cryptocurrencies and a 51% Attack

Altcoins are more susceptible to a 51% attack, as they are not as mature nor have as much computational power as bitcoin. But there are responses to a 51% attack that a cryptocurrency under attack can apply. The most common is known as a “hard fork.” Forking is essentially another way in which the blockchain can be changed and history rewritten, but it is done with the consensus of the majority.

For example, Ethereum decided to hard fork its entire chain to recover after the DAO ‘hack’ in 2016. The majority of Ethereum miners created a fork to keep the blockchain’s history intact, but erase the hack and make it look as if the DAO attack never happened.

This led to a split among those who were not in agreement, and the emergence of Ethereum Classic, which trades at a fraction of Ethereum as we all know it. While purists are against the notion of forking to right a wrong (believing that the “code is law”), forking is starting to become common practice. Had it not been for forking, after all, Ethereum would surely have collapsed.

Similarly, a recent possible 51% attack on the Verge network produced uncertainty and concern about this privacy-oriented cryptocurrency. Close to $1 million of the currency was stolen as one single miner was able to trick the system into thinking it had the consensus. While the Verge team claim to have the “bug” under control, it’s more than likely they will have to carry out a hard fork to prevent attacks like this from happening in the future.

So, just when you thought you were getting your head around the blockchain and getting to know its undisputed qualities, you found out there’s more to this beast than meets the eye. The blockchain is not, in fact immutable. However, the chances of a 51% attack on a major network are smaller than an ant moving a mountain.

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Christina is a technology and business communicator who has worked with high profile ICOs and blockchain influencers to break industry news.

Stakester Brings New Experiences and Royalties to Gamers with NFTs Comments Off on Stakester Brings New Experiences and Royalties to Gamers with NFTs 530

A cheat code NFT allows owners to accrue money, prizes and royalties in the context of popular games.

On Tuesday, Stakester announced its intention to launch a VIP pass in the form of NFTs that it says will enhance the experience for users of its popular gaming app. 

The app, which pairs gamers with real-life opponents, allows players to stake real cash and prizes on their competitive skills in popular games like FIFA 21 and Call of Duty: Warzone. It’s seen significant growth since its launch in 2020, and touts 100,000 members across 31 countries. 

With the forthcoming NFT drop, users will now unlock the potential for larger prizes, access to VIP arenas, and 50% of royalties on the secondary market.

“The NFTs embody Stakester’s vision of delivering electrifying gaming experiences through the thrill of competition,” says Tom Fairey, Founder and CEO of Stakester. “NFT holders will help us shape new, undreamt-of entertainment experiences as gaming becomes ever more powerful and immersive.”

Two levels of NFTs will be offered. At .1 and .25 ETH, respectively, the barrier to entry is high, but Stakester is hoping gamers will see the value of layered experiences and unlocking additional incentives with real-world value. 

“The idea of earning rewards, just like a normal reward scheme but built around NFTs, is totally fit for the future,” says Mike White, CEO and Strategist of immersive entertainment marketing agency, Lively.  “The whole idea of royalties is truly exciting.” 

Stakester’s 50% royalty incentive, Fairey believes, will create stakeholders out of the players on his platform.

 “As well as the increase in gaming utility, the NFT drops provide Stakester users with a chance to invest in the future of the company and, for VIP Legendary holders, there’s also an opportunity to benefit from a royalty share from certain competitions and to make a passive income from NFTs, regardless of whether they go up in value or not,” he says. “Stakester is one of the only platforms to offer this kind of bonus.”

White points out that Gala Games is doing something similar with Nodes which allow gamers to receive rewards like NFTs when they contribute meaningfully to the Gala Network.

He predicts that legacy gaming companies will be adopting similar NFT models, but the winners in the NFT gaming race are hard to predict, particularly since there’s so much attention around NFTs that it’s hard to differentiate between hype and long-term value. 

“I’m sure it will be an immediate success,” he says. “Will it be a long-term thing? We can only wait and see.”

Why Is Everyone Talking About NFTs? Comments Off on Why Is Everyone Talking About NFTs? 238

In this writer’s opinion the NFT hype is warranted — but not for the reason most people are investing. 

For those who’ve been in the space since Bitcoin’s early surge, you’ll remember the Initial Coin Offering (ICO) boom of 2017. The crowdfunding vehicle, which mirrored an IPO on the public market, brought with it massive amounts of investment into the blockchain space that seemed to mirror Bitcoin’s rapidly increasing value. 

In retrospect, none of it made sense. 

With all the hype, the investment in the space didn’t match due diligence. As of August 2018, investors had lost nearly $100M in ICO exit scams, a major reason we no longer hear about ICOs. 

From there, crowdfunding through token sales was rebranded alongside SEC regulation as Security Token Offerings (STOs). Additional fundraising iterations to enter the scene are Initial DEX Offerings (IDOs) and Initial Exchange Offerings (IEOs).

NFTs are having a similar moment to the immature and potentially reckless ICO market of 2017. The danger can be credited to a mix of hype and a widely unregulated environment with various points of entry and gatekeepers that are not incentivized to shore up fraud. 

As a result, many purchasers of NFTs are falling victim to a spectrum that spans undeserving projects on the mild end and outright scams at the extreme. Meanwhile, hackers are exploiting the unregulated environment. 

Just yesterday, $3 million in NFTs were stolen via an Instagram phishing scam. 

This writer, however, is still bullish on NFTs — just not the ones that are getting all the attention.

NFTs represent a concrete entry-point into the blockchain with a tangible utility and infinite disruptive implications. 

Here are a few.

Digital Assets as Social Proof 

As a Millennial, I personally have a hard time understanding the notion of owning and assigning value to a digital asset, but my kids don’t. 

I’ve written about how Gen Z has already adopted the concept of social proof in digital environments by assigning socially relevant value to digital assets like video game skins. 

As Gen Z ages and becomes an increasingly powerful consumer population, this experience will matter. Whether or not their purchase behavior translates to adulthood remains to be seen, but our kids are already leveraging digital assets in the metaverse to exhibit their position in the social hierarchy in the same way that my generation assigned value to Jansport-brand backpacks. 

Their concept of digital assets will be fundamentally different from ours, and NFTs are likely to benefit. 

But Why Are NFTs Relevant to Me Now?

Social proof is far from the most interesting use case for NFTs. 

In the near-term, NFTs can be utilized to store sale information of physical goods on the blockchain in order to eliminate nefarious actors in fraud-riddled industries like fine wine and art. 

Moreover, NFTs can disrupt any industry with a substantial secondary market. By coding royalties into the smart contract of NFTs, original sellers of wine, art and other trade-susceptible brands and industries can ensure they’ll capture a fee anytime an item is transferred. 

This solves a major problem for creators like photographers, artists and musicians that are notoriously underpaid in comparison to the value they create for brokers. It also has the potential to cut out middlemen like auction houses, record labels, and galleries to democratize the creator economy. 

Other Innovators Have Introduced Creative Use Cases for NFTs

Gary Vaynerchuk utilizes NFTs as tickets for events and other value-adds to his community. Forbes introduced a series of NFT Billionaires that will update alongside the real-time NYSE to gamify their user’s NFT experience in a way that’s brand-relevant. Foxies.art is using a gamified version of NFTs to fundraise blockchain education for women. 

The utility of NFTs is confined only by the imagination of our innovators. Whether or not NFT headlines today will remain relevant is yet to be seen, but one thing is certain: the disruption is only beginning. 

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