[ExI] Kevin Dowd on Bitcoin

[Harvey Newstrom]

I'm not sure if the large mining consortium is really shady.  The real concern is that the protocol allows it to be shady.  The protocol allows a large (over 51%) consortium to take any or all the bitcoins they want.  This makes the system less trustworthy than the mathematical encryption and verification originally intended.

Part of the protocol is that network members vote on whose claim they saw first, to determine who actually gets credit for first mining each announced coin when multiple claims are announced close to the same time.  Any group (or even appealingly unconnected collaborators) that can control 51% of the vote can merely vote themselves as owners of any new bitcoin.  It is a known flaw in the protocol.

Original knowledge of this flaw was dismissed under the assumption that no single group could control that much of the bitcoin mining pool.  But this has since happened.  Now experts are proposing fixes and derivative systems to address this flaw.  Many alternatives to bitcoin exist and many of them have already addressed this flaw.

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Harvey Newstrom   www.HarveyNewstrom.com