How Do Cryptocurrency Exchanges Protect Themselves from 51% Attacks?
Exchanges employ several strategies to protect against 51% attacks and the resulting double-spends. They often require a higher number of block confirmations for deposits from smaller, more vulnerable coins, increasing the time and cost for an attacker to rewrite the chain.
They also monitor network hashrates for sudden, suspicious spikes and may temporarily halt deposits and withdrawals for a specific coin if an attack is suspected. Some exchanges participate in consortiums that share threat intelligence.
In the event of an attack, an exchange might delist the compromised coin to protect its users and itself from further losses.
Glossar
Block Confirmations
Confirmation Latency ⎊ Block Confirmations represent the number of subsequent blocks appended to the chain after the block containing a specific transaction has been mined or proposed.
Cryptocurrency Exchanges
Exchange ⎊ Cryptocurrency exchanges function as marketplaces facilitating the trading of digital assets, bridging traditional finance with decentralized networks.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.
Risk Management
Exposure ⎊ Within cryptocurrency derivatives and options trading, exposure represents the aggregate risk arising from positions predicated on anticipated price movements.