Another Bitcoin Flaw?

One thing cannot be disputed about the person (or persons) responsible for creating Bitcoin: they were skilled in math, and expert at coding. Five years after the Bitcoin software was first released, no major fixes have been needed to the core code, which uses cryptography to generate and transfer virtual money.

Yet signs are emerging of more subtle flaws in the vision of Satoshi Nakamoto (which may or may not be a pseudonym), with analysis suggesting the rules governing how Bitcoin operates as a currency may be far from perfect. Some researchers claim that these rules leave room for cheats to destabilize Bitcoin. Others have concluded that major changes to the currency’s rules will be needed as the number of bitcoins in circulation increases.

“In the real world, people don’t always follow the rules—they do what’s best for them,” says Joshua Kroll, a researcher at Princeton. “Understanding this is the key to understanding whether and how Bitcoin survives—it tells you whether the system can last for a long time, [and] how robust is it in the face of shocks.”

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