When Blockchain Consensus Mechanisms Fail
Ever binge-watched a series where things go fine, and you don’t see a twist coming, and then out of the blue, there’s a twist that leaves you in a shock? You just can’t tear yourself away, right? The same thing can occur with a blockchain only that instead of shocking stories, it’s the consensus mechanisms that, keep everything in order, suddenly fail.
These are the moments that make or break a blockchain, turning a smooth ride into a thriller.
What’s a consensus mechanism, you may ask? A consensus mechanism is a process used in blockchain networks to ensure that all participants, or nodes, agree on the state of the blockchain.
Imagine you and your friends are trying to decide on a game to play. Everyone wants to play a different game, and there's no one around to decide. So, you all have to come up with a way to agree on which game to play together.
In the blockchain, this "group" is made up of computers (called nodes), and they need to agree on the list of transactions (like who paid whom) to add to a shared ledger (the blockchain). The consensus mechanism tells who has how much weight in the final decision, even though there's no single computer in charge.
To do so, blockchains use different consensus mechanisms, also called Sybil-resistance mechanisms such as Proof of Work (PoW) and Proof of Stake (PoS) to ensure that nodes agree on the state of the blockchain.
But when the nodes aren’t able to decide which transactions to agree upon or the malicious nodes try to trick the group by taking the majority of the control over the network 50% +1 in the case of PoW and 33%+1 in the case of PoS, the blockchain consensus fails and leads to a disaster for the blockchain.
Let’s dive into some real-life blockchain incidents where consensus mechanisms failed and see what happened next.
1. Bitcoin Gold: A costly 51% attack
In 2018, Bitcoin Gold – a fork of Bitcoin suffered a major blow with a Sybil attack. During the incident attackers managed to gain control of the majority of the network’s hash power, enabling them to double-spend more than $18 million worth of Bitcoin gold.
How do they do it? By reversing the transactions. This incident undermined the trust in the network and exposed the vulnerabilities that smaller blockchains face when their security mechanisms are weak. This is one of the earliest attacks that resulted in a major concern over the potential attacks smaller chains could face.
But that’s not the end of the story.
2. Ethereum Classic: The 51% attack
In 2020, Ethereum Classic faced a 51% attack, which resulted in $5.1 million worth of ETC being double spent. The hacker started the attack by transferring ETC from an exchange wallet under his control and then transferring it back.
After renting hack power from Nicehash provider ‘daggerhashimoto’ to control Ethereum classic’s hash power, the attacker was able to mine 4280 blocks over four days. They then created private transactions sending ETC to wallets under its control, before broadcasting the blocks containing transfers to their wallets and reorganizing the blockchain.
What else might go awry in the future?
3. Ethereum’s difficulty bomb: A ticking clock
Ethereum, one of the popular blockchains out there, had a plan – a "difficulty bomb" to slowly make mining harder and push the network toward a new system called PoS.
But in 2017, something unexpected happened. The bomb started ticking faster than anticipated, slowing down transactions and causing headaches across the network. It was like setting a timer to go off at a future date, only to find out that the clock was running out of batteries and speeding up. The team had to scramble to fix the issue before it caused more damage, showing us that even the best-laid plans can go wrong.
4. EOS – When elections turn into havoc
EOS which was intended to operate as a role model of decentralized governance through its Delegated Proof of Stake (DPoS) system in which token holders participate in selecting block producers through voting mechanisms. However, in 2018 multiple issues arose leading to a complex situation. Allegations of vote manipulation and collaboration among block producers surfaced. Transforming what was meant to be a democratic procedure into what seemed like a predetermined outcome or unfair competition scenario instead.
Many within the EOS community were left disheartened by this turn of events as they came to the realization that a select few influential players had the ability to sway outcomes in their favor without resistance or checks, in place. The event served as an indication that the effectiveness of decentralization relies heavily on the individuals who support it.
And just when you thought it was safe… Consensus failure still occurs. Read a recent example
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In 2023, Dymension faced a critical failure during its mainnet launch, caused by consensus issues among its validators. Chorus One, the largest validator on the network, experienced node problems that prevented it from participating effectively in the consensus process. Since Chorus One held 34.8% of the network’s voting power, this single failure meant the entire network could not reach a consensus. The network’s PoS mechanism, which requires a 66% agreement to proceed, was disrupted, showcasing how dependency on large validators can destabilize a blockchain. Validators worked together to restart the network, but the incident highlighted the risks of centralization within a PoS system.
The Big “What If?”: Could Bitcoin’s consensus fail?
Bitcoin is often considered as the gold standard of blockchain, with its PoW consensus mechanism. But what if, just what if, it failed? Imagine a scenario where an attacker gains control of over 51% of the network’s computing power. They could rewrite history, double-spending coins and causing mass panic. The trust that underpins Bitcoin - and indeed much of the crypto world – could evaporate overnight.
Now, think of Bitcoin switching to PoS. The risks shift, but they don’t disappear. Large stakeholders could potentially control the network, turning the decentralized dream into a nightmare of centralization. It’s a sobering thought, reminding us that not even the most popular systems aren’t invincible.
Although it is practically impossible to produce a 51% attack on Bitcoin as it will require a large sum of money to gain such hash power, the possibility is still there. The same is the case with coordinated attacks on Ethereum’s PoS.
What’s Next?
These consensus failures are like the twists in your favorite show – they keep you on the edge of your seat, wondering what’s going to happen next. They remind us that blockchain tech, although powerful, is not without its flaws. Each failure teaches us something new, pushing us to build stronger, more resilient systems. So, the next time you’re marveling at the magic of blockchain, remember: It’s the challenges and the failures that drive innovation and keep this technology moving forward.
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