Bitcoin currency could have been destroyed by 51% attack | Technolog
Bitcoin has stared down an existential threat, after a consortium of miners briefly gained enough processing power to theoretically destroy the currency.
For a few hours on Friday, mining pool Ghash.io controlled 51% of all the processing power being used to perform the calculations that keep bitcoin secure. If it had abused that power, it would have had the ability to indirectly take money from other users, for instance by buying something and then rewriting history so that the purchase never happened.
But shortly after the threshold was breached, some members of the mining pool pulled their computing power from the group, averting – or at least, delaying – catastrophe.
"The high level of combined hash power in the Ghash pool is concerning to many participants in the system," said one such member, BitFury, an industrial bitcoin mining firm. "As a leader and trusted partner in the bitcoin system, BitFury has decided to transfer some of its hashing power away from Ghash to help reduce these concerns."
The bitcoin network runs with the aid of peer participants performing a function called "mining", which involves spending large amounts of processing power in order to verify transactions as accurate.
Miners are given financial rewards for doing so, and since there are so many of them, it is typically impossible to force a fake transaction into the bitcoin ledger: more than half the processing power of the network would need to verify the fake transaction.
But many miners lump their processing power together, in "pools" such as Ghash, in order to increase the chances of getting rewards. While that makes financial sense for any individual miner, it has long posed the threat of ending the decentralised aspect that makes bitcoin so popular.
For the brief period when Ghash had 51% of the network, the security of bitcoin wasn't a result of its impressive mathematical background, but merely the trust that the users of Ghash would notice and respond if the pool's administrators decided to try and abuse their position.
It's not the first time the "impossible" attack on bitcoin has been scarily close. In January, Ghash hit 45% of the network, and was forced to "take steps" to prevent 51% from being breached. Those steps were apparently insufficient.
There is no evidence that Ghash actually tried to abuse its position, and once contributors like BitFury pulled their computers, its proportion of the mining dropped to a healthier 40%. That has led some experts, such as Andreessen Horowitz's Chris Dixon, to dub the problem "a minor issue."
"It would be very hard for the pool to pull off more than a minor short term attack," Dixon tweeted Sunday night.
The real protection isn't technology but economics. Someone controlling 51% of the bitcoin network could theoretically extort or otherwise gain control of a large quantity of bitcoins. But defenders point out that the very action of performing a "51% attack" would demolish the value of bitcoin to such an extent that it would be impossible to profit from the attack.
That won't keep it safe from troublemakers, but could ensure that organised attempts to recreate Ghash's 51% – or steal it from under them – flounder in the preparation.
The 51% attack is the first headline news to happen to bitcoin in a long time, but even as the media grows tired of the currency, development continues.
Users of Google Finance and Yahoo Finance can now use the sites to convert between bitcoin and USD dollars. Google goes one step further, treating bitcoin identically to conventional currencies, offering users a selection of news headlines alongside the latest price.
Both firms are several months behind Microsoft, which added bitcoin to its Bing finance product in February, and even the normally-measured financial types at Bloomberg, which included the cryptocurrency in February.
Tellingly, neither Google nor Yahoo's press offices were aware the changes had been made when the Guardian contacted them, though Google later responded to say "we're always working to provide more of the financial data people are looking for."
On Monday, the first bitcoin apps to take advantage of Apple's new rules allowing cryptocurrencies on the app store began to appear.
Coinpocket was previously only accessible as an HTML5 web app, to get around the restrictions, but now the wallet app, which lets users spend and receive their bitcoins, is relaunched as a native iPhone app. The new version also includes the ability to spend bitcoin by scanning QR codes.
Perhaps more importantly, apps which let users spend bitcoin for digital goods have also turned up on the app store. Betcoin and eGifter both allow bitcoin purchases, the former as part of a simple betting game and the latter for gift cards.
While the apps might still be pulled by Apple after the fact, their existence on the App Store could signal another major change in direction from the company.