IT WAS all going so well. A flaw that lets selfish Bitcoin users get more than their fair share could upset the balance of the $1.5 billion economy built on the virtual currency.
Ittay Eyal and Emin Gün Sirer of Cornell University in Ithaca, New York, think Bitcoin mining – the process by which Bitcoins are generated – can be manipulated (arxiv.org/abs/1311.0243v1).
The minting process for Bitcoin is spread widely. To do this, people set their computers to solve cryptographic puzzles. These create “blocks” that are added to the public record of transactions. This “blockchain” is shared. But a group of miners could gain an advantage by withholding blocks they generate. Lengthening their private chain would make it the dominant one when eventually released because people add to the longest existing chain. The group would get a higher share of coins for this. If it works, it would impact the currency’s credibility, says Bitcoin developer Mike Hearn. “Confidence in Bitcoin would be hurt and the value would fall.”