A major flaw that has gone unrealized until now leaves the $1.5 billion Bitcoin market open to manipulation and a potential takeover, according to a new study by two Cornell University computer scientists.
Bitcoin is a peer-to-peer online currency that is rapidly gaining mainstream acceptance. Instead of exchanging physical coins, users of Bitcoin use the Internet to record money transactions in a global ledger. This ledger is maintained by a peer-to-peer network of computers called miners, who are compensated with Bitcoins for their efforts. Conventional wisdom asserts that Bitcoin is secure against colluding minority groups of miners.
But post-doctoral fellow Ittay Eyal and Prof. Emin Gün Sirer have discovered that the conventional wisdom is wrong. In a paper that was released on ArXiv today, they describe a mining strategy they call Selfish-Mine, which allows a group of colluding miners, known as a mining pool, to earn more than its fair share of compensation. Moreover, large mining pools can use this strategy to increase their revenue even more, at the expense of honest miners.
Study: http://arxiv.org/pdf/1311.0243v1.pdf
The implications of this result are devastating for the system, say Eyal and Sirer. Once a selfish mining pool forms, other miners will want to join that pool to increase their revenue. This process could lead to a takeover, where the selfish miners become a majority, control the global Bitcoin ledger, and the decentralized nature of the currency collapses.
Currently, any pool can employ Selfish-Mine and start a mudslide. Eyal and Sirer suggest a practical fix of the protocol that would prevent pools smaller than 1/4th of the system from employing Selfish-Mine. They warn, however, than pools this large do exist today (for benign reasons), and they should be dismantled for the system to be immune to selfish mining.
Go deeper with Bing News on:
Bitcoin
- Bitcoin Drops. What’s Coming Next in the Crypto ETF Market.
Bitcoin was falling Thursday but other cryptocurrencies were mixed, with momentum still lacking following a surge in prices earlier this year. Bitcoin has fallen 1.8% over the last 24 hours to $61,227.
- Bitcoin miners see $26.3 million low in wake of halving
The fourth-ever bitcoin halving, which took place in mid-April, has led to bitcoin miners recording one of their lowest earnings in a single day, with the industry netting just $26.3 million from bitcoin transaction fees and rewards on May 1, per Cointelegraph.
Go deeper with Google Headlines on:
Bitcoin
[google_news title=”” keyword=”Bitcoin” num_posts=”5″ blurb_length=”0″ show_thumb=”left”]
Go deeper with Bing News on:
Online currency
- Trump trial live updates: Key Trump aide recalls 'Access Hollywood' tape 'rattling' RNC
Trump last April pleaded not guilty to a 34-count indictment charging him with falsifying business records in connection with a hush money payment his then-attorney Michael Cohen made to Daniels in ...
- Trump lawyer argues Stormy Daniels was out to make money as testimony continues in hush-money trial – live
Susan Necheles questions Daniels about her relationship to Trump, her motivations for selling story, and calling him an ‘orange turd’. 18:53 Donald Trump’s legal team tried to discredit ...
- Trump trial live updates: Stormy Daniels is back on the stand in hush money case
Follow along to the latest updates as adult film star Stormy Daniels is due back on the witness stand Thursday in Donald Trump's hush money trial.
- Trump trial live updates: Stormy Daniels returns to the witness stand to resume testimony in hush money case
The former president’s criminal hush money trial resumes Thursday in Manhattan, where the adult film star is expected to return to the witness stand.
- Donald Trump Hush Money Trial Live Updates: Stormy Daniels Resumes Testimony
Stormy Daniels returns to the stand Thursday in the New York hush money trial against former President Donald Trump. Follow Newsweek's live blog for the latest updates.
Go deeper with Google Headlines on:
Online currency
[google_news title=”” keyword=”online currency” num_posts=”5″ blurb_length=”0″ show_thumb=”left”]