(New Scientist) Bitcoin contains a hitherto unnoticed flaw which threatens to upset the balance of the $1.5 billion economy built on the virtual currency.
Ittay Eyal and Emin Gun Sirer, of Cornell University in New York have discovered the “devastating” potential for Bitcoin “mining” – the process by which Bitcoins are generated – to be manipulated (arxiv.org/abs/1311.0243v1).
Bitcoins are generated when people connect their computers to the network and set them to work on a cryptographic puzzle. This is known as mining. When a puzzle has been solved it adds a digital “block” to the public record of all Bitcoin transactions, known as the “blockchain”. The miners are then rewarded with a set amount of Bitcoins.