Financial News

  • 18 June 2014, 7:25

Fears As British Company Now 'Controls' Bitcoin

A British-based computer 'mining pool' called GHash has gained unprecedented control over virtual currency bitcoin.

It has amassed nearly half of the bitcoin computing power - which keeps track of bitcoins and creates additional coins.

The value of bitcoins has fallen 6% in a week as the extent of GHash's power became clear and it briefly edged over 51% control.

It could in theory control the flow of transactions, freeze people out of the network and keep all future bitcoins for itself.

But CEX.IO, the company behind GHash, said in a statement: "Our intention is to help protect and grow the broad acceptance of bitcoin and categorically in no way harm or damage it."

It said it recognised the "concerns and possible threat posed by an entity with malicious intent taking control of enough mining power to exploit the 51% scenario."

However it said any exploitation or attack would be obvious and "pretty easy to defend against".

It is now arranging a "round table" meeting of key players in the Bitcoin system in July "with the aim of discussing and negotiating collectively ways to address the decentralisation of mining as an industry".

But Ittay Eyal, a Cornell University researcher who studies bitcoin vulnerabilities, warned: "The entire premise of bitcoin relies on the fact that no single authority would control the majority of the mining power."

Bitcoins are sequences of numbers produced by computers which churn through millions of calculations.

They are recorded in a virtual public ledger known as the blockchain.

Miners are in charge of maintaining the blockchain, and as their computers perform the calculations to do that, the process rewards them with newly minted bitcoins.

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