A security threat brought about by flooding the network with a large number of pseudonymous nodes. A Sybil attack may diminish relay of blocks and unconfirmed transactions and could be used to give a false impression of the network’s node composition.
A Sybil attack in the context of the Bitcoin network refers to a security threat where an individual or a group tries to subvert utility of the network by creating a large number of pseudonymous identities. Bitcoin’s peer-to-peer system relies on each node having at least one honest peer to learn about the current state of the network. By flooding the network with nodes, an attacker can censor or delay relay of unconfirmed transaction, or hamper block relay. A Sybil attack may be a stepping stone for an attempt at isolating a victim by overtaking all of their peer connections in a so-called eclipse-attack, or may help tricking a victim into accepting an unconfirmed transaction that has already been doublespent on the best chain. A Sybil attack may also be used to give a false impression of what node software is popular on the network.
It's important to note that the Bitcoin network has inherent protections against Sybil attacks. The most critical of these is the Proof of Work (PoW) consensus mechanism, which requires nodes to expend computational work to create new blocks. This ensures that even when an attacker can create a huge number of nodes they cannot easily mislead victims into believing a false state of the network, although they may be able to prevent the victim from learning about new blocks for some time. A more powerful related attack involves the attacker taking over a majority of the hashrate (see majority-attack) which gives the attacker vastly more sway about the state of the network.
Additionally, the decentralized and distributed nature of the Bitcoin network means that an attacker would need to control a massive number of nodes to have a significant impact, which is both technically challenging and economically unfeasible in most cases.
