Two computer science researchers at Cornell Universitysay they’ve uncovered a fundamental flaw in Bitcoin that is so bad, it could kill Bitcoin dead.
The problem is with how people “mine” bitcoins. Mining is how bitcoins are created. Most people don’t mine bitcoins anymore. They buy them or take them as payment. But some people are in the business of mining coins with special bitcoin-mining computers. Even so, it is so difficult and time consuming for a computer to create new bitcoins that some miners have banded together in pools, using multiple computers that work together.
They say that when too many miners gang together, they can obtain more than “their fair share” of bitcoins and this can lead to a monopoly over the whole system. They write:
… the problem is intrinsic to the entire way Bitcoin works … 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 … the currency .. is no longer decentralized; the controlling entity can determine who participates in mining and which transactions are committed, and can even roll back transactions at will.
Their solution, these researchers say, is to change how bitcoin mining works so a single pool of miners can never control more than 25% of the available mining power.