Fresh from the digital mint (Image: Jim Urquhart/Reuters)

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.


The blockchain is occasionally split into branches when separate users generate blocks from the same previous block. Miners agree to work on the longest branch, so as soon as one of these branches becomes longer than the other, the shorter branch is abandoned.

Although groups form to share computing power and split the profits, what they receive is proportional to the resources they contribute.

Selfish mining

However, the research argues that it is theoretically possible for one group to gain an advantage by engaging in what the authors call “selfish mining”.

In this scenario, the group does not release solutions to solved cryptopuzzles. Instead, it mines a branch in secret, hiding it from honest miners.

Lengthening the private chain would make it the dominant one when eventually released. The group would then get a higher share of coins than is fair for the resources they have contributed because they have forced other miners to waste computing power on the original chain. The problem gets worse as the selfish group recruits extra members.

Sirer, who describes the problem on his blog , says: “Until now we thought that if the attackers were in a minority they would be ineffective but suddenly we’ve shown that no, that doesn’t have to be the case.”

Mine, all mine

“Once there’s an incentive to join your selfish mining group it’s going to grow in number. If you were to achieve the majority status, that’s actually very dangerous because Bitcoin would effectively be under your control,” says Sirer.

Bitcoin has traditionally been understood as relatively safe to invest in. It is extremely difficult, for example, to counterfeit. However, Eyal and Sirer’s findings are now being investigated by members of the Bitcoin community.

“The attack is very clever, and unfortunately it will work,” says Bitcoin developer Peter Todd. “There’s been a tendency for the Bitcoin community to assume miners always have the best interests of Bitcoin in the long term in mind. So far this has generally proven to be true, but as mining becomes less profitable due to the inflation rate dropping (it halves every 4 years) I think we’ll see more and more selfish behaviour.”

Another Bitcoin developer, Mike Hearn, adds that if the technique worked, it would have a negative impact on Bitcoin as a whole, leaving everyone, including the selfish miners, at a loss, just when the currency was starting to be taken seriously by the international community: “If miners were to start attacking the system or seizing control of it, confidence in Bitcoin would be severely hurt and the value would fall.”

Reference: arXiv:1311.0243v1