Bitcoin security guarantee shattered
by anonymous miner with 51% network power.
http://arstechnica.com/security/2014/06/bitcoin-security-guarantee-shattered-by-anonymous-miner-with-51-network-power/
Cornering the Bitcoin market may be easier than cornering orange juice futures.
For the first time in Bitcoin's five-year history, a single entity has repeatedly provided more than half of the total computational power required to mine new digital coins, in some cases for sustained periods of time. It's an event that, if it persists, signals the end of the crypto currency's decentralized structure.
Researchers from Cornell University say that on multiple occasions, a single mining pool repeatedly contributed more than 51 percent of Bitcoin's total cryptographic hashing output for spans as long as 12 hours. The contributor was GHash, which bills itself as the "#1 Crypto & Bitcoin Mining Pool." During these periods, the GHash operators had unprecedented powers that circumvented the decentralization that is often held up as a salient advantage Bitcoin has over traditional currencies. So-called 51 percenters, for instance, have the ability to spend the same coins twice, reject competing miners' transactions, or extort higher fees from people with large holdings. Even worse, a malicious player with a majority holding could wage a denial-of-service attack against the entire Bitcoin network.
SNIP
The Cornell researchers rejected arguments some Bitcoin advocates have asserted that attacks on the Bitcoin blockchain are infeasible because they would require 51 percenters to act against their own investments in hardware and interest in a stable digital currency. From the start, the researchers said, the point of Bitcoin has been to incorporate strong cryptography as a self-policing system that ensured all players were on equal footing.
"Overall, there is absolutely no reason to trust GHash or any other miner," they wrote in Friday's post. "People in positions of power are known to abuse it. A group with a history or double-expenditures just blithely went past the 51 percent psychological barrier: this is not good for Bitcoin."
