Researchers from Cornell University caused a stir among Bitcoin enthusiasts this week with a report detailing what they said was a technical vulnerability that would allow people to corner the supply of the virtual currency, undermining the entire system. News about Bitcoin has had a tendency to bounce around in value a lot, depending on new developments, but the revelation of a potentially fatal flaw hasn’t much registered on its market, which has been on quite the upward swing.
Like everything with Bitcoin, the specifics of the Cornell report are complicated. But it basically works like this: The Bitcoin system is based on getting its users to guarantee that coins aren’t spent twice. This requires a good deal of computational power, so the system rewards users who verify blocks of transactions by awarding new Bitcoins to those doing the computing. The process is known as mining. Just like miners looking for gold, the Bitcoin type doesn’t know exactly where the rewards will be. Every once in a while, Bitcoin miners involved in verifying blocks of transactions will unlock a reward, announce it, and everyone moves to the next block.
The supposed vulnerability comes when miners don’t tell everyone else when they’ve completed work on one block. So-called selfish miners, warn researchers Ittay Eyal and Emin Gun Sirer, could keep their success a secret and then move on the next block, gaining a head start on everyone else. If a large enough network of computers get in on such a plan, they could stay just far enough ahead of the crowd, continuing to claim the rewards for themselves.
This isn’t the first time that this type of scheme has been discussed as a possible threat to Bitcoin. Nor is there any evidence that people have actually tried to carry it out. Skeptics immediately said that existing methods to prevent this type of attack are already in place.
Gavin Andresen, the chief scientist at the Bitcoin Foundation, an advocacy group, wrote a response essentially dismissing the research while giving its authors an A for Effort. “Let me start out with how fantastic it is that we’re seeing more academic interest and research in Bitcoin-the-system,” he wrote in a blog post. “In the coming months, I expect we’ll be seeing a lot more research claiming to have found ways to [make] various pieces of Bitcoin better. Some of it will even turn out to be right.”
But not this research, which Andresen said was based on “oversimplified assumptions about how the bitcoin mining market works.” Keep poking and prodding at Bitcoin, he tells researchers, but let’s not get all up in a tizzy the second each new paper comes out. “Peer review works best when everybody involved is given time [for] conversation and debate without being contacted by [reporters] on deadline,” he wrote.
The specifics of this particular attack are muddy, but one thing about the Bitcoin market is clear: Demand for insight exceeds supply.