Featured Research

from universities, journals, and other organizations

Bitcoin open to takeover, researchers discover with new algorithm

Date:
November 4, 2013
Source:
Cornell University
Summary:
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 computer scientists.

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.

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.

This result implies a new bound, requiring 3/4 of the miners to be honest. This bound is significantly higher than the wrongly-believed 1/2. The authors believe, though, that "the Bitcoin ecosystem is strong enough to maintain such a large majority of honest miners." The question is -- can the miners operating today adopt the suggested fix and dismantle too-large pools before a selfish mining pool arises?


Story Source:

The above story is based on materials provided by Cornell University. Note: Materials may be edited for content and length.


Journal Reference:

  1. Ittay Eyal and Emin Gun Sirer. Majority is not Enough: Bitcoin Mining is Vulnerable. Submitted to ArXiv, 2013

Cite This Page:

Cornell University. "Bitcoin open to takeover, researchers discover with new algorithm." ScienceDaily. ScienceDaily, 4 November 2013. <www.sciencedaily.com/releases/2013/11/131104112234.htm>.
Cornell University. (2013, November 4). Bitcoin open to takeover, researchers discover with new algorithm. ScienceDaily. Retrieved April 16, 2014 from www.sciencedaily.com/releases/2013/11/131104112234.htm
Cornell University. "Bitcoin open to takeover, researchers discover with new algorithm." ScienceDaily. www.sciencedaily.com/releases/2013/11/131104112234.htm (accessed April 16, 2014).

Share This



More Computers & Math News

Wednesday, April 16, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

German Researchers Crack Samsung's Fingerprint Scanner

German Researchers Crack Samsung's Fingerprint Scanner

Newsy (Apr. 16, 2014) — German researchers have used a fake fingerprint made from glue to bypass the fingerprint security system on Samsung's new Galaxy S5 smartphone. Video provided by Newsy
Powered by NewsLook.com
Twitter, Apple Social Data Purchases Likely to Spur More Mergers and Acquisitions

Twitter, Apple Social Data Purchases Likely to Spur More Mergers and Acquisitions

TheStreet (Apr. 16, 2014) — The social media data space is likely to see more mergers and acquisitions following Twitter Inc.'s acquisition of tweet analyzer Gnip Inc. on Tuesday and Apples Inc.'s purchase of Topsy Labs Inc. back in December. One firm in particular, the U.K.'s DataSift Inc., could be on the list of potential buyers. Among other social media startups that could be ripe for picking is Banjo, whose mobile app provides aggregated content by topic and location. Banjo could also be a good fit for Twitter. Video provided by TheStreet
Powered by NewsLook.com
Bitcoin Exchange Mt. Gox to Liquidate After Rebuilding Rejected

Bitcoin Exchange Mt. Gox to Liquidate After Rebuilding Rejected

TheStreet (Apr. 16, 2014) — Bitcoin exchange Mt. Gox has agreed to liquidate after a Japanese court rejected its plans to rebuild, according to a report by the Wall Street Journal. Mt. Gox filed for bankruptcy protection in February after announcing about 850,000 bitcoins, worth around $454 million at today's rates, may have been stolen by hackers. It has since recovered 200,000 of the missing bitcoins. The court put Mt. Gox's assets under a provisional administrator's control until bankruptcy proceedings begin. Video provided by TheStreet
Powered by NewsLook.com
BlackBerry: The Crash That Launched 1,000 Startups

BlackBerry: The Crash That Launched 1,000 Startups

Reuters - Business Video Online (Apr. 16, 2014) — Tech startups in BlackBerry's hometown of Waterloo, Ontario, are tapping talent from the struggling smartphone company and filling the void left in the region by its meltdown. Reuters correspondent Euan Rocha visits the region that could become Canada's Silicon Valley. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
 
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:  

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:  

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile iPhone Android Web
Follow Facebook Twitter Google+
Subscribe RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins