HomeCryptocurrency NewsSybil Attacks: What are they and how do blockchains mitigate them?

Sybil Attacks: What are they and how do blockchains mitigate them?

What is a Sybil Attack, how does it work and can blockchains mitigate such hacks? Tag along to find out.

By CNBCTV18.com November 17, 2022, 4:26:38 PM IST (Published)

Crypto attacks have been on the rise in recent times. According to Chainanalysis, October was the biggest month for crypto hacking activity, with more than $760 million lost during the 31-day period and over $3 billion syphoned off this year alone. One of the reasons for this spike is the ever-increasing number of methods hackers are using to infiltrate crypto platforms. However, perhaps the most feared type of exploit, known as a Sybil Attack, has been around for years and could prove disastrous for a blockchain network if successfully carried out. 

What is a Sybil Attack?

A Sybil Attack is an online exploit where hackers infiltrate a network by controlling multiple computers or accounts. Such attacks aim to gain majority control of a network and use it to influence transactions and other functions of the network. In the world of Web3, these attacks typically refer to a malicious entity operating multiple nodes to gain control of a blockchain network.

The aim of carrying out a Sybil attack is to gain significant influence over the network to carry out illegal activities while still adhering to the fundamental rules and regulations of the system. A single computer or entity can create multiple IP address-based user accounts, which to an external observer will appear as original unique identities, although they are not. 

Also Read: Binance to relaunch its offer to buy insolvent Voyager Digital - Coindesk

How does a Sybil Attack work on a blockchain network?

To carry out a Sybil attack on a normal network, the hacker must impersonate legitimate users by creating multiple fake accounts. He does this by gaining access to already existing accounts on the network. To do this, hackers usually compromise users' email ids, passwords and other login credentials. 

However, this exploit works a little differently on a blockchain network. Here, the aim is to control more than 51 percent of the network nodes. Once the hackers are able to control enough malicious nodes, they can block out the honest nodes, eventually being able to reverse transactions and redirect amounts to a wallet they control. They can also prevent the confirmation of transactions and change the order in which the transactions were made. 

How does blockchain mitigate such attacks? 

Although there are several methods by which blockchain and peer-to-peer networks can prevent Sybil attacks, it is a very challenging task. It usually requires a combination of three key elements to ward off attackers, they are given below. 

Cost of creating an identity 

Increasing the cost of running a node is usually the first way of mitigating a Sybil attack. For instance, with Ethereum's PoS consensus mechanism, users have to stake a minimum of 32 ETH to qualify as a node. 

Also Read: All you need to know about the CBDC project by the NY Federal Reserve

That's around $39,000 at current prices. There are nearly 8,000 nodes on the Ethereum network, and to carry out a Sybil Attack, one would have to control at least 51 percent of these nodes. 

That's a large amount of money that needs to be contributed up-front. Moreover, it does not guarantee that the hacker will be able to pull off the attack. If things go wrong, and the network notices any malicious behaviour, the hacker will lose their staked amount. 

Creating a chain of trust

Another way to prevent Sybil attacks is to verify trust before joining a network. Usually, this can be seen in reputation systems, where only verified users can invite new users on the network. 

Some P2P networks require you to submit proof of identity before allowing you to access the network. Other networks use Two Factor Verification and authenticated codes. These methods require a certain degree of identity verification before voting privileges are granted to the users. These trust-building practices make it challenging for hackers to create fake accounts.

Also Read: Bitcoin holds ground below $17,000, Ethereum slips 3.9% as cryptocurrencies fall

Unequal Reputation 

Another way of mitigating Sybil attacks is to ensure that new users are given less prominence in the network and restrict their actions to a certain degree. Only long-term users with a proven record can enjoy more voting power and discuss communal matters.

As a result, even if hackers can access many new accounts, they are restricted from privileges granted to older and more authentic accounts. However, this approach turns the system into a meritocracy rather than being democratic, thereby limiting a new user's actions. 

Conclusion 

With a Sybil Attack, the hacker floods the network with the nodes they control. To the untrained eye, these are just new nodes. This makes it quite challenging to detect these attacks until they are already taking place. However, networks using a combination of the aforementioned elements witness a reduced risk of running into such attacks and prevent them while they occur.

Also Read: A quick guide on crypto vanity addresses: How to generate them and their safety concerns