Certified Bitcoin Professional Practice Exam

What characterizes a 51% attack in a blockchain network?

1. A single entity controls the majority of mining power

2. Only miners can conduct transactions

3. A government agency takes over the network

4. It involves a collaboration of multiple miners

The correct answer is: A single entity controls the majority of mining power

A 51% attack is characterized by a situation in which a single entity or group controls more than 50% of the network's mining power. This majority control allows the entity to manipulate the network in several significant ways, such as reversing transactions, double spending coins, and preventing other miners from successfully mining new blocks. This not only undermines the integrity of the blockchain but can also lead to a loss of trust among users. In this context, the emphasis on the control of mining power is crucial, as it illustrates the vulnerability of a blockchain when a single player has enough influence to dictate the network's functionality. Without this concentration of mining power, such attacks would be impractical or impossible because the consensus mechanism of the blockchain relies on a distributed network of miners reaching agreement on the state of the blockchain. Other options do not accurately encapsulate the essence of a 51% attack. The statement regarding miners being the only ones who can transact misconstrues the broader functionality of blockchains, which allow anyone to transact. The notion of a government agency taking over the network or a collaboration of multiple miners lacks the distinct feature of dominance by a single entity or group, which is a hallmark of a 51% attack.