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Bitcoin’s Fatal Flaw



Comments (6)

  1. Kirk says:

    Oh please, give me a break. Here’s the thing: Nobody heavily invested in Bitcoins wants anyone to have a 50% control – it’s a recipe for disaster that will cost everybody involved. So, after people realized it went that high, they spread out to other exchanges and its now down to 35%. This article implies that people want it to happen, but it never will, because they don’t.

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  2. Jonathan Fisher says:

    I think one of the points of the article is that due to this technology flaw Bitcoin can be manipulated by a handful of people who could do so at the expense of the major bitcoin holders, and there is nothing the majority can do.

    I frankly don’t understand the technology enough to comment intelligently, but the point the author is trying to raise needs to be addressed head on by others: Is there really a fatal flaw in its design allowing for manipulation by a handful?

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  3. Denny says:

    While the point that Louis makes may very well be valid, it would only put Bitcoin on par with any other currency in the world. All fiat currencies are artificially manipulated by their issuing entities or governments. Of course Bitcoin can be risky, but that risk isn’t deterring me… yet.

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  4. Nik says:

    Shocking how uninformed you are on this. The computations required to “mine” coins have nothing to do with verifying the transactions. Those are done via a public ledger which is widely replicated to ensure authenticity.

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  5. projas says:

    Louis: please learn and study before speaking nonsense, you are really making a fool of yourself. Most readers won’t notice, but many will latter see you as a fool.

    It is like saying ‘the Euro is not safe because no one can stop a 4 year old from cloning a 10 Euro bill with some piece of paper and some crayons”. That is how fool you sound to a knowledgeable person in cryptocurrencies.

    Even if Ghash.io gained over 50% of the computing power, it would not allow them to ‘clone’ bitcoins, it they did it, they effectively through all that computing power to the trash as everyone else in the network would automatically, by protocol, discard ghash.io claims. As of now there are many junk claims posted on the network every second, but they are discarded right away and forgotten because they don’t follow protocol.

    Also, one thing is to touch 50% and another is to keep it for long (even just a few hours).
    Most of the damage they could do if they wanted is to commit fraud against merchants that accept bitcoins with no confirmation. This is done by publishing an unconfirmed transaction saying that they sent bitcoins to a merchant, but then confirming in the blockchain another transaction saying that those bitcoins were sent to another person, thus making the original transaction publication invalid. Only some poker sites and some minor merchants (like bars and coffee shops with a physical person paying) accept payments without confirmation, and it is normally for a small amounts.

    The majority of transactions are accepted by the receiver after the standard 6th confirmation. Which would require the attacking miner to undo about 1 hour of mining. If the attacker had 51% it would then take him 50 more hours to unwind and catchup the other 49% honest miners. If it had 55% it would still take 10 hours to catchup. And it would be in a high risk because this would be noticed by all the watchdogs in place and 2 things may happen: The bitcoin value goes down, making it less profitable for the attacker, or the rest of the community coordinated with the smaller pool operators update their software with a new checkpoint which would discard the attackers blockchain fork, making him loose thousands of allegedly mined bitcoins.
    Beside the mining effort put in the blockchain, the blockchain is also secured by checkpoints that are added in the softwares’ releases so certain checkpoint blocks (like a block release yesterday which has enough confirmations) are deemed valid for historical reasons, no attacker can undo them without forcing everybody to change the software and deleting the checkpoints.

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  6. Joe says:

    Has anyone considered that bitcoins are being created by miners doing the transaction work but what will happen when all the bitcoins have been mined and then there are no miners to do the work of recording the transactions?? The bitcoin bubble will break since it costs a lot of money to do the computational work for recording these transactions!

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