User security threats take many forms, so this guide will focus on answering the question of what a Sybil attack in crypto is.

Not all perpetrators attack a network’s users; some try to attack the network itself. An example is the Sybil attack, which can affect any P2P network.

So, let’s learn more about its meaning and the risk it poses to blockchain networks.

What Is a Sybil Attack?

In the early 2000s, Microsoft researchers John R. Douceur and Biran Zill first defined the concept of a Sybil attack. So, what is a Sybil attack in crypto?

The attack involves a single entity directly or indirectly controlling a substantial number of network nodes. The goal is to make legitimate network participants believe that each node is a separate participant when, in fact, a single attacker controls numerous nodes. Put simply, the attacker is trying to disrupt the system and use it to its advantage.

For example, a Sybil attack can represent fraudulent voting in an online voting system or an election. It can also involve creating many social media accounts on popular platforms to spread falsified data or even share fraudulent links to gather users’ confidential data.

How Does a Sybil Attack Work in Crypto?

To launch a Sybil attack, the perpetrator has to create multiple false nodes to take control of a blockchain network by tricking it into treating these fraudulent accounts as legitimate.

If the perpetrator successfully gathers sufficient malicious nodes into the network, they can exploit this advantage by leveraging it against legitimate nodes. For example, in a network where miners vote on proposals, an attacker may use many identities to outvote honest nodes. Perpetrators may also seize and examine sensitive user data, compromising security and privacy.

Usually, the Sybil attacker’s end goal is a 51% attack — a type of double-spending attacks. It involves one entity gaining over 50% of a network’s hashing power, granting the attacker the capacity to modify sections of the blockchain. That means they can re-order transactions, reverse their own transactions resulting in double spending, or block transactions from being validated.

What Issues Can Sybil Attacks Cause?

Sybil attacks cause three primary issues:

  • As mentioned, one is a 51% attack, in which the perpetrator controls more than half of the network’s total hashing power. This attack damages the blockchain network’s integrity and may cause network disruption. It can alter the transaction order, enable double-spending, and prevent transaction confirmation.
  • A Sybil attack can block users from the network by creating enough identities to allow perpetrators to outvote legitimate nodes and deny receiving or transmitting blocks, undermining Sybil resistance.
  • This attack may also breach privacy, as the perpetrator can run a fraudulent node to gather sensitive details that honest nodes are passing. Depending on the information the attacker seeks, a Sybil attack poses a risk to the blockchain. Illegally obtaining the IP addresses of those operating the honest nodes is one example of the potential details at risk.

Sybil Attack in Crypto: Examples

Two of the most well-known Sybil attacks in history are Monero and Ethereum Classic:

  • In November 2020, Monero suffered a 10-day Sybil attack. The perpetrator tried to deanonymize the platform’s transactions. A single entity used many fraudulent nodes to interfere with the Monero network. They took advantage of a bug to increase the chances for the network to accept these nodes, purposefully discarding transactions to make them unsuccessful, and monitored IP addresses to connect them to specific transactions. Finally, the perpetrator couldn’t bypass Monero’s security measures and was prevented from successfully associating user IP addresses with transactions. That was due to Monero’s privacy-preserving protocol, Dandelion++.
  • Another Sybil attack example is the Ethereum Classic one.  Ethereum Classic was the original Ethereum network. In 2016, it suffered a major setback when the first DAO on the Ethereum network was hacked, leading to the theft of ETH worth millions of dollars. As a result, Ethereum overwent a hard fork to recover the stolen funds. Then, the new chain used the name Ethereum, while the individuals opposing the fork kept using the old “Ethereum Classic” name, with ETC, their version of ETH. Since then, Ethereum Classic has suffered several 51% Sybil attacks, with the worst occurring in 2020. The attack involved a perpetrator gaining control over most of the hash power of Ethereum Classic. That allowed the attacker to perform a complex double spend, which included transferring ETC to their wallets and then back while diverting funds through cryptocurrency exchanges. Ultimately, the attacker successfully stole over $5 million worth of ETC.

To prevent these attacks from happening, blockchain networks use consensus mechanisms like Proof-of-Work and Proof-of-Stake. In a Proof-of-Work system, for instance, the capacity to generate a block is directly tied to the overall processing power of the system. This implies that an assailant would have to possess the computational power necessary to produce a new block, making it challenging and expensive to carry out a Sybil attack.

How to Prevent Sybil Attack on Blockchain

Several measures can be taken for Sybil attack prevention:

  • Reputation systems: Building these systems directly on the network is extremely beneficial. Reputation systems that assess a node’s trustworthiness using its past behavior and contributions make it challenging for a Sybil attacker to impersonate multiple entities. This is because the attacker would need to consistently uphold and enhance their reputation and influence across numerous nodes over an extended period.
  • Cryptoeconomic security: This innovation requires network participants to provide proof of economic stake or computational work, making it technically or economically impractical for a single entity to control most nodes, stake, or hash rate.
  • Social trust graphs: These graphs can be used for Sybil detection by representing visual portrayals of each network’s validator, classifying validators based on their proven honesty. So, if an algorithm identifies some fraudulent nodes, it will show a low trust level, allowing the main network’s operators to detect Sybil attack attempts quickly. Yet, the graphs aren’t 100% fast and accurate.
  • Identity verification: Sybil attacks rely on pseudo-anonymous or semi-permissionless network access. If networks are permissioned and participants are known, they don’t have to worry about Sybil attacks. So, great protection includes validating node identities before they access the network.

Conclusion

What is a Sybil attack in crypto? It involves a single entity directly or indirectly controlling a substantial number of network nodes. The goal is to make honest network participants believe that each node is a separate participant when, in fact, a single attacker dishonestly controls numerous nodes.

Sybil attacks cause three primary issues: a 51% attack, blocking users from the network, and privacy breaches. Two of the most well-known Sybil attacks in history are Monero and Ethereum Classic. Several measures can be taken to prevent Sybil attacks: reputation systems, cryptoeconomic security, using social trust graphs, and identity verification.

FAQs

What is Sybil attack in crypto wallet?

What is Sybil attack in crypto mining?

What is Sybil detection in cryptography?