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And not just superficially so, but fundamentally, at the core protocol level. We're not talking about a simple buffer overflow here, or even a badly designed API that can be easily patched; instead, the problem is intrinsic to the entire way Bitcoin works.

All other cryptocurrencies and schemes based on the same Bitcoin idea, including Litecoin, Namecoin, and any of the other few dozen Bitcoin-inspired currencies, are broken as well. Specifically, in a paper we placed on arXiv, Ittay Eyal and I outline an attack by which a minority group of miners can obtain revenues in excess of their fair share, and grow in number until they reach a majority. When this point is reached, the Bitcoin value-proposition collapses: This snowball scenario does not require an ill-intentioned Bond-style villain to launch; it can take place as the collaborative result of people trying to earn a bit more money for their mining efforts.

Conventional wisdom has long asserted that Bitcoin is secure against groups of colluding miners as litecoin difficulty change my yahoo mail as the majority of the miners are honest by honest, we mean that they dutifully obey the protocol as prescribed by pseudonymous Nakamoto.

Our work shows that this assertion is wrong. We show that, at the moment, any group of nodes employing our attack will succeed in earning an income above their fair share.

We also show a new bound that invalidates the honest majority claim: Even with our fix deployed, however, there is a problem: We need the Bitcoin community's awareness and concerted effort to ensure that no mining pool reaches these thresholds. The mere possibility that the system can get into a vulnerable state will be an impediment to greater adoption of Bitcoin.

Those of you who want a precise litecoin difficulty change my yahoo mail full explanation of the attack can cut straight to the research paperthough it may be a bit terse and dry. In the rest of this blog entry, we will outline the attack for the non-hard-core litecoin difficulty change my yahoo mail, such that by the end of the blog entry, anyone should understand the intuition behind our attack, be equipped to earn higher revenues through mining, and possess the tools required to usurp the currency.

To get to this point, we need a little bit of background on how Bitcoin works. If you're familiar with Bitcoin mining, you can skip to the next section that describes how the attack works. If you are a non-techie Bitcoin user, you can skip straight to the Implications section. The key idea behind Bitcoin's success is a decentralized protocol for maintaining a global ledger, called a blockchain.

The blockchain records transactions between Bitcoin addresses, tracking the movement of every Bitcoin as it changes hands. This tracking ensures that no one can double-spend a coin, as the ledger makes it all too apparent whether a user sent out more Bitcoins from his account than he earned.

The particular way in which Bitcoin tracking is performed makes sure that the record is also immutable; once a Bitcoin transaction is committed and buried in the blockchain, it is difficult for an attacker to reverse the transaction, so that a merchant can ship goods in good conscience, assured that the transaction will later not be reversed. This protocol works through a process called mining.

In essence, the ledger is organized into a single, ordered sequence of blocks, each of which records a set of transactions. Litecoin difficulty change my yahoo mail organize themselves into a loosely-organized, distributed network, and they all concurrently litecoin difficulty change my yahoo mail to add a new block to the ledger. To do this, they need to discover the solution to a crypto-puzzle, formed by the contents of the ledger until the point where the new block is being added.

Solving a crypto-puzzle is hard work; a computer has to plug in many different values and see if they solve the crypto-puzzle posed by the new block. The puzzles are such that a home computer working alone will take many years to solve a crypto-puzzle.

Of course, this process is not free, as the process of solving these crypto-puzzles consumes power and requires cooling. For the currency to be viable, the miners need to be compensated for their efforts. Bitcoin miners are compensated through two mechanisms: This lump sum fee creates new Bitcoins, according litecoin difficulty change my yahoo mail a time-varying formula.

Hence, "mining" is similar to digging for gold litecoin difficulty change my yahoo mail every now and then, a miner is rewarded with a nugget. The difficulty of crypto-puzzles are automatically adjusted such that a new block is added to the ledger approximately every 10 minutes, which ensures a predictable coin generation rate for litecoin difficulty change my yahoo mail system, which stems inflation and makes the currency supply more predictable than it would be otherwise.

The nice thing about having crypto-puzzles that are so difficult is that it is not practical for an attacker to modify the ledger. Someone who wants to, say, buy something from a Bitcoin merchant, get the goods shipped, and then later change that block to erase the transfer of money to the merchant, faces a very difficult task: What makes this difficult is that the main bulk of the miners will be working hard on adding new blocks at the tail end of the ledger, so an attacker, with limited resources, cannot hope to find alternative solutions for all the past blocks and catch up to the rest of the miners.

Miners today organize themselves into groups known as pools. A pool will typically consist of a set of cooperating nodes that share their revenues whenever they find blocks. Mining pools are kind of like the shared tip jar at a restaurant: Since this occurs relatively infrequently from litecoin difficulty change my yahoo mail point of view of any given miner, sharing the proceeds enables the miners to have more predictability in their lives.

The litecoin difficulty change my yahoo mail Bitcoin protocol assumes that all miners engage in a benign strategy where they quickly and truthfully share every block they have discovered. Until now, everyone assumed that this was the dominant strategy; no other strategy was known that could result in higher revenues for miners.

Our work shows that there is an alternative strategy, called Selfish-Mine, that enables a mining pool to make additional money at the risk of hurting the system. In Selfish-Mining, miners keep their block discoveries private to their own pool, and judiciously reveal them to the rest of the honest miners so as to force the honest miners to waste their resources on blocks that are ultimately not part of the blockchain.

Here's how this works in practice. Selfish miners start out just like regular miners, working on finding a new block that goes at the end of the blockchain. On occasion, like every other miner, they will discover a block and get ahead of the rest of the honest miners.

Whereas an honest miner would immediately publicize this new block and cause the rest of the honest miners to shift their effort to the newly established end of the chain, a selfish miner keeps this block private. From here, two things can happen. The selfish miners may get lucky again, and increase their lead by finding another block. They will now be ahead of the honest crowd by two blocks.

They keep their new discovery secret as well, and work on extending their lead. Eventually, the honest miners close the gap. Just before the gap is closed, the selfish pool publishes its longer chain. The result is that all the honest miners' work is discarded, and the selfish miners enjoy the revenue from their previously secret chain.

The analysis of revenues gets technical from here, and the only way to do it justice is to follow along the algorithm and state machine provided in our paper. But the outcome is that the selfish mining pool, on the whole, nullifies the work performed by the honest pool through their revelations. The success of the attack, and the amount of excess revenue it yields, depends on the size of the selfish mining pool. It will not be successful if the pool is below a threshold size.

But this threshold is non-existent in the current implementation -- selfish mining is immediately profitable. Once a group of selfish miners appear litecoin difficulty change my yahoo mail the horizon, rational miners will preferentially join that mining group to obtain a share of their higher revenues.

And their revenues will increase with increasing group size. This creates a dynamic where the attackers can quickly acquire majority mining power, at which point the decentralized nature of the Bitcoin currency collapses, as the attackers get to control all transactions.

It all depends on how the controlling group runs the currency. But the decentralization, which in our view is so critical to Bitcoin's adoption, is lost. It would not be at all healthy for the Bitcoin ecosystem. It affects every currency system that litecoin difficulty change my yahoo mail inspired by Bitcoin's blockchain. That includes Litecoin, PPcoin, Novacoin, Namecoin, Primecoin, Terracoin, Worldcoin, and a host of other currencies that share the same global ledger concept.

We're the first to litecoin difficulty change my yahoo mail that the Bitcoin protocol is not incentive-compatible. The protocol can be gamed by people with selfish interests. And once the system veers away from litecoin difficulty change my yahoo mail happy mode where everyone is honest, there is no force that opposes litecoin difficulty change my yahoo mail growth of really large pools that command control of the currency. We cannot know for sure, but we suspect not. Ours litecoin difficulty change my yahoo mail the first work to publicly investigate an alternative mining strategy.

At the moment, the threshold is non-existent. A selfish mining pool can hide behind throwaway addresses to mask its identity. And while the timing of block revelations does look different for selfish miners, it's difficult to tell who was genuinely first, as near-concurrent revelations will arrive in different orders at hosts.

The only way to protect the system against selfish mining attacks is to get everyone to change their implementations. So the only way we can protect the system is by publicizing the potential attack.

We have chosen not to litecoin difficulty change my yahoo mail the attack ourselves, because we care about the long-term viability of the currency.

We have shown that as long as selfish miners are below a certain threshold, they will not succeed. And while this threshold does not exist yet i. Followup post on frequently-asked questions. Followup post on the novelty of the selfish mining attack. Followup post on litecoin difficulty change my yahoo mail among capitalists.

Followup post on response to feedback on selfish mining. The comments below, coming from "Bitcoin entrepreneurs", organized into a brigade, litecoin difficulty change my yahoo mail all four of these stages at the same time.

I have preserved them as they are except for deleting profanity-laced commentsto shame the community. In some cases, the commenters edited their own comments when proven wrong, so reading the comment chains may seem non-sensical at times as a result.

My Research Interests are distributed systems and algorithms, specifically distributed storage algorithms, the distributed aspects of Bitcoin, and reliable aggregation in distributed sensor networks. Hacker and professor at Cornell, with interests that span distributed systems, OSes and networking. Bitcoin Is Broken bitcoin security broken selfish-mining November 04, at Addendum, November 14, Followup post on frequently-asked questions Followup post on the novelty of the selfish mining attack Followup post on altruism among capitalists Followup post on response to feedback on selfish mining.

Addendum, February 28, Haldane says that there are four stages of acceptance to new ideas: This is worthless nonsense. This is an interesting, but perverse, point of view. This is true, but quite unimportant.

I always said so.

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Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto [11] and released as open-source software in Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, [13] products, and services. As of February , over , merchants and vendors accepted bitcoin as payment. The word bitcoin first occurred and was defined in the white paper [5] that was published on 31 October There is no uniform convention for bitcoin capitalization.

Some sources use Bitcoin , capitalized, to refer to the technology and network and bitcoin , lowercase, to refer to the unit of account. The unit of account of the bitcoin system is a bitcoin. Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0. As with most new symbols, font support is very limited. Typefaces supporting it include Horta. On 18 August , the domain name "bitcoin. In January , the bitcoin network came into existence after Satoshi Nakamoto mined the first ever block on the chain, known as the genesis block.

This note has been interpreted as both a timestamp of the genesis date and a derisive comment on the instability caused by fractional-reserve banking. The receiver of the first bitcoin transaction was cypherpunk Hal Finney , who created the first reusable proof-of-work system RPOW in In the early days, Nakamoto is estimated to have mined 1 million bitcoins. So, if I get hit by a bus, it would be clear that the project would go on. Over the history of Bitcoin there have been several spins offs and deliberate hard forks that have lived on as separate blockchains.

These have come to be known as "altcoins", short for alternative coins, since Bitcoin was the first blockchain and these are derivative of it. These spin offs occur so that new ideas can be tested, when the scope of that idea is outside that of Bitcoin, or when the community is split about merging such changes.

Since then there have been numerous forks of Bitcoin. See list of bitcoin forks. The blockchain is a public ledger that records bitcoin transactions. A novel solution accomplishes this without any trusted central authority: The blockchain is a distributed database — to achieve independent verification of the chain of ownership of any and every bitcoin amount, each network node stores its own copy of the blockchain.

This allows bitcoin software to determine when a particular bitcoin amount has been spent, which is necessary in order to prevent double-spending in an environment without central oversight. Whereas a conventional ledger records the transfers of actual bills or promissory notes that exist apart from it, the blockchain is the only place that bitcoins can be said to exist in the form of unspent outputs of transactions.

Transactions are defined using a Forth -like scripting language. When a user sends bitcoins, the user designates each address and the amount of bitcoin being sent to that address in an output. To prevent double spending, each input must refer to a previous unspent output in the blockchain.

Since transactions can have multiple outputs, users can send bitcoins to multiple recipients in one transaction. As in a cash transaction, the sum of inputs coins used to pay can exceed the intended sum of payments. In such a case, an additional output is used, returning the change back to the payer. Paying a transaction fee is optional. Because the size of mined blocks is capped by the network, miners choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee.

The size of transactions is dependent on the number of inputs used to create the transaction, and the number of outputs. In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address is nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse computing the private key of a given bitcoin address is mathematically unfeasible and so users can tell others and make public a bitcoin address without compromising its corresponding private key.

Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds.

The vast number of valid private keys makes it unfeasible that brute force could be used for that. To be able to spend the bitcoins, the owner must know the corresponding private key and digitally sign the transaction. The network verifies the signature using the public key. If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; [9] the coins are then unusable, and effectively lost.

Mining is a record-keeping service done through the use of computer processing power. To be accepted by the rest of the network, a new block must contain a so-called proof-of-work PoW.

Every 2, blocks approximately 14 days at roughly 10 min per block , the difficulty target is adjusted based on the network's recent performance, with the aim of keeping the average time between new blocks at ten minutes. In this way the system automatically adapts to the total amount of mining power on the network. The proof-of-work system, alongside the chaining of blocks, makes modifications of the blockchain extremely hard, as an attacker must modify all subsequent blocks in order for the modifications of one block to be accepted.

Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment.

In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block. The successful miner finding the new block is rewarded with newly created bitcoins and transaction fees.

To claim the reward, a special transaction called a coinbase is included with the processed payments. The bitcoin protocol specifies that the reward for adding a block will be halved every , blocks approximately every four years. Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins [f] will be reached c.

Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold [60] or store bitcoins, [61] due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings" [61] and allows one to access and spend them.

Bitcoin uses public-key cryptography , in which two cryptographic keys, one public and one private, are generated. There are three modes which wallets can operate in. They have an inverse relationship with regards to trustlessness and computational requirements. Third-party internet services called online wallets offer similar functionality but may be easier to use. In this case, credentials to access funds are stored with the online wallet provider rather than on the user's hardware.

A malicious provider or a breach in server security may cause entrusted bitcoins to be stolen. An example of such a security breach occurred with Mt. Physical wallets store offline the credentials necessary to spend bitcoins.

Another type of wallet called a hardware wallet keeps credentials offline while facilitating transactions. The first wallet program — simply named "Bitcoin" — was released in by Satoshi Nakamoto as open-source code. While a decentralized system cannot have an "official" implementation, Bitcoin Core is considered by some to be bitcoin's preferred implementation.

Bitcoin was designed not to need a central authority [5] and the bitcoin network is considered to be decentralized.

In mining pool Ghash. The pool has voluntarily capped their hashing power at Bitcoin is pseudonymous , meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public.

In addition, transactions can be linked to individuals and companies through "idioms of use" e. To heighten financial privacy, a new bitcoin address can be generated for each transaction. Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.

The blocks in the blockchain were originally limited to 32 megabyte in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto in , as an anti-spam measure.

On 24 August at block , , Segregated Witness SegWit went live, introducing a new transaction format where signature data is separated and known as the witness. The upgrade replaced the block size limit with a limit on a new measure called block weight , which counts non-witness data four times as much as witness data, and allows a maximum weight of 4 megabytes.

Bitcoin is a digital asset designed by its inventor, Satoshi Nakamoto, to work as a currency. The question whether bitcoin is a currency or not is still disputed. According to research produced by Cambridge University , there were between 2. The number of users has grown significantly since , when there were , to 1.

In , the number of merchants accepting bitcoin exceeded , Reasons for this fall include high transaction fees due to bitcoin's scalability issues, long transaction times and a rise in value making consumers unwilling to spend it. Merchants accepting bitcoin ordinarily use the services of bitcoin payment service providers such as BitPay or Coinbase.

When a customer pays in bitcoin, the payment service provider accepts the bitcoin on behalf of the merchant, converts it to the local currency, and sends the obtained amount to merchant's bank account, charging a fee for the service. Bitcoins can be bought on digital currency exchanges. According to Tony Gallippi , a co-founder of BitPay , "banks are scared to deal with bitcoin companies, even if they really want to". In a report, Bank of America Merrill Lynch stated that "we believe bitcoin can become a major means of payment for e-commerce and may emerge as a serious competitor to traditional money-transfer providers.

Plans were announced to include a bitcoin futures option on the Chicago Mercantile Exchange in Some Argentinians have bought bitcoins to protect their savings against high inflation or the possibility that governments could confiscate savings accounts.