Bitcoin community rattled by one group controlling half of bitcoin mining

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Earlier this year, bitcoiners were in quite a state after there were many fears that bitcoin’s largest mining pool, GHash.io, nearly took over the digital currency in a 24-hour period. The bitcoin community went to Reddit to voice their concerns, but GHash had already attempted to prevent the attack. The crisis was averted but experts noted that it showed bitcoin is susceptible to a 51 percent takeover.

The reports of a 51 percent are once again surfacing. Media publications have cited Cornell University researchers who noted that a single mining pool now controls more than half of the digital currency’s cryptographic process to mint bitcoins. It has done so repeatedly for more than 12 hours.

In the past, GHash was only able to control 51 percent for a couple of minutes, but now that number has shot up to at least half a day. The researchers wrote in a statement that 12 hours could be enough for an entity to seriously harm the network.

Bitcoin’s computational power could be at stake with this revelation: an entity that controls more than 50 percent of bitcoin mining could reject competing miners’ transactions, demand higher fees from individuals with larger holdings and may even spend the same bitcoins twice. Heck, a dire scenario could be that the one unity controlling 51 percent of bitcoin could even institute a DDoS attack.

“If they tried to do [something malicious]people would notice and there would be blowback, “Matt Green, a Johns Hopkins University professor specializing in cryptography, told Ars Technica. “So it’s not the end of the world. Nonetheless, the security model of Bitcoin depends on no miner having (even close to) majority. Right now that assumption is being violated.”

Furthermore, bitcoin experts say that attacks on the blockchain are impossible because it would require elements of the 51 percent to proceed against their own interests by devaluing their own investments and holdings.

Although some are dismissing the possibility, Gavin Andresen, Board Member and Chief Scientist at the Bitcoin Foundation, published a blog post that lambasted how bitcoin mining has become too centralized in recent months. He listed the two of the aforementioned possibilities of a potential GHash attack, but said that they’re unlikely to happen.

Here is what he wrote Friday:

“I think either attack is extremely unlikely from an economically rational mining pool– blockchain history would make it obvious that they were mis-using their power, and I’m certain either technical or social solutions would be found to punish the bad behavior. However, this is a good time to re-iterate my standard disclaimers: Bitcoin is still a work in progress, and you should only risk time or money on it that you can afford to lose. Mining centralization is one of several potential risks…”

Fears of a 51 percent have caused the price of bitcoin to fall. For several weeks, the value of the cryptocurrency rose from less than $300 to as high as $650, but, at the time of this writing, bitcoin is now at $595.

Coinbuzz

CoinBuzz provides news and analysis on Bitcoin and other digital currencies. Founded in 2014, the site has quickly become a leading source of information on digital currency technologies, businesses, markets, and regulation.

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