Bitcoin, the p2p online currency that’s taken the world by storm over the last 2 years, isn’t a stranger to criticism. Most recently, two Cornell University compsci researchers have discovered a major flaw that leaves the entire system open to manipulation and corruption.
Conventional wisdom has suggested that the $1.5 billion market is safe from typical exploits, but post-doctoral fellow Ittay Eyal and Prof. Emin Gün Sirer have described a 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.
In it’s essence, the Selfish-Mine strategy isn’t intrinsically wrong or bad. The issue comes when, like in most financial systems, the Selfish-Mine collusion becomes “too big to fail”. With a large enough set of miners, a Selfish-Mine group could feasibly control the fate of the online market.
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 — the question is whether or not the existing ecosystem of miners are willing to take the necessary steps.
via Science Daily