As the digital currency collapses, the discovery of a unique structure to the Bitcoin network could cause user anonymity to fall like dominoes.
Bitcoin’s remarkable growth in value is a curious story. Launched in March 2009 worth $0, Bitcoin reached parity with the dollar in September 2011. In November last year it peaked in value at over $60,000 and at the time of writing its worth has collapsed to around $20,000.
The researchers say these early Bitcoin users had numerous opportunities to game the system and yet they stuck to the rules allowing Bitcoin to emerge as the decentralized currency it is today.Perhaps more significant is the structure of the Bitcoin Network that emerged from this process. Blackburn and co say this structure has unexpectedly made Bitcoin vulnerable to a kind of attack that could de-anonymize almost any of its users.
But this process is vulnerable to attack when one person or group of individuals controls more than half of the computing power encrypting the blockchain. When that happens, they can rewrite the transaction record to allow them to spend the same Bitcoins more than once. “As bitcoin’s price neared $1, a 51% attack could become increasingly lucrative for the attacker,” say the team. “This created a social dilemma for bitcoin’s participants.”
The team’s conclusion comes from a new way to link different transactions to the same Bitcoin address. The team then assume each address is controlled by a single agent. In this way, it is possible to narrow down the number of agents, of which 64 did the vast majority of mining at that time.It also turns out that the distribution of Bitcoin very quickly follows the same power law, known as the Pareto distribution, as wealth in every other currency.
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