A group of dishonest Bitcoin ‘miners’ could theoretically take control of the virtual currency ecosystem, warns a team of researchers from Cornell University, New York.
They say Bitcoin (BTC) is “broken” at the distributed protocol level, and miners could conspire to deceive the blockchain – a public record of every transaction in the network – in order to maximise their profits in the long run.
For such a conspiracy to work, the so-called ‘selfish’ miners need to command huge amounts of processing power. With the recent boom in the popularity of bitcoins and companies like CoinTerra manufacturing specialised hardware, this type of attack might already be happening.
Researchers propose a solution that could mitigate the risk of one group taking control of Bitcoin. However, they say the protocol will never be safe against attacks by a selfish mining pool that commands more than a third of the total mining power of the network.
Bitcoin relies on an open-source, peer-to-peer Internet protocol, first introduced in 2009 by an anonymous developer known under the alias ‘Satoshi Nakamoto’.
The system assumes that all participants are honest, and report new bitcoins as soon as they are discovered. However, if a group of miners chose to keep the new blocks secret and not release the information into the blockchain, it could gain an unfair advantage.
Academics Ittay Eyal and Emin Gun Sirer say this group could stay ahead of the competition, which would be stuck solving cryptographical challenges that have already yielded bitcoins, losing time, effort and money.
“The key insight behind the selfish mining strategy is to force the honest miners into performing wasted computations on the stale public [blockchain] branch. Specifically, selfish mining forces the honest miners to spend their cycles on blocks that are destined to not be part of the blockchain,” explained the researchers.
In time, rational miners would prefer to join the selfish miners in order to maximise their profits, and the selfish group would increase its influence until it becomes a majority. At this point, Bitcoin would stop being decentralised, losing one of its most attractive properties. Control by a single entity could even lead to the complete collapse of the digital currency.
Researchers say that selfish mining is feasible for any group size of colluding miners, as long as they have enough hardware at their disposal. Indeed groups capable of such projects already exist.
Eyal and Sirer propose a modification to the Bitcoin protocol that protects against selfish mining pools that command less than a quarter of the overall mining resources. But they say that the virual currency will never be completely safe against this type of attack.
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Cornell has the third largest sponsorship by alumni in the US and those folks read like a who's who of Big Banking. Yup, the same folks who jumped all over the US politico to stop Bitcoin in the first place.
Try checking the source bias before hitting "print" next time.
Okay, they are wrong. Here is why.
For the mining group to pull this off, they have to attract more miners to gain power in the network. And they have to communicate to everyone in the pool about the block that they are holding in reserve and mining against. And they can't let anyone not in the mining pool know about this.
NOBODY IN THE REST OF THE NETWORK CAN KNOW THEY ARE DOING THIS.
You can't both let anyone join that wants to, and keep a secret from the rest of the network!
So ... No. This attack just doesn't work in reality. Miners in the pool CAN RELEASE THE MINED BLOCK THEMSELVES!
It is important to understand that this attack was not peer reviewed. It is pure FUD. It isn't real.