Bitcoin Cartel Seizes Enough Power to Spend Money Twice

On paper, Bitcoin is easy, decentralized, secure, and democratic. Doesn't that sound nice? Unfortunately, the real Bitcoin is currently threatened by a shadowy organization called GHash that's managed to control 51% of the currency's computing power, and could destabilize the entire thing.

Ars Technica reports that for the first time in the history of Bitcoin, the internet's favorite anonymous heroin-purchasing voucher, "a single entity has repeatedly provided more than half of the total computational power required to mine new digital coins, in some cases for sustained periods of time." That entity is GHash, a so-called "mining pool" that allows individuals to band together to generate Bitcoins out of thin air at a steady rate. Mining pools are supposed to take some of the sting out of this generating process, which is costly in terms of time, hardware, and your electricity bill.

But by consolidating a majority of the planet's Bitcoin mining capacity, GHash has become a central figure in what's supposed to be an entirely decentralized system. And unlike, say, a central bank, no one knows who the hell really owns and operates GHash. It's accountable to nobody. There's no one to get in touch with, or scrutinize, or subpoena. There's no name on the door. GHash can also leverage its majority control of Bitcoin mining for all sorts of naughty tricks, like nullifying transactions at will, or spending the same Bitcoins more than once—a scam GHash has already been busted for once before.

So how do you bring true regulation to a community of generally paranoid armchair economists? Reddit, in perfectly typical Reddit fashion, seems to think some combination of vengeance and whining is the answer:

The way to "regulate" mining pools is to fuck up their earnings if they misbehave. The Bitcoin Foundation is a toothless entity that moves at a snail's pace, what are they going to do, put out a blog post that says "Please Stop?".

If only there were some other, more reliable form of money one could freely acquire and spend!

Photo: Getty