Did Ukrainians Almost Take Over Bitcoin?: Bitcoin was designed to be a currency free from the corrupting influence of government or any other centralized authority. Now, though, with the value of a single electronic unit hovering around $1,000, the battle to control emission of Bitcoins is on.
The developers of Bitcoin created an ingenious system to regulate the currency’s supply: Independent “miners” earn new currency by using their computers’ processing power to perform the mathematical operations needed to make transactions in Bitcoin possible. The operations become more difficult as the amount of Bitcoins issued approaches a limit of 21 million.
Initially, a home computer was all one required to become a Bitcoin miner. As the market grew, high-performance graphic cards became the tool of choice. Nowadays, most of the mining is done by dedicated devices called application-specific integrated circuits, and miners form pools that allow them to earn a regular, small profit instead of the occasional and improbable big payoff.
One mining pool, known as GHash.io and run by an outfit called CEX.io, went a step further by selling something akin to shares in a high-tech operation with lots of specialized hardware. Would-be miners simply pay for their piece of the computing power, then sit back and collect income.
Last week, some independent miners noticed that GHash.io had grown so large that it controlled 45 percent of the Bitcoin network’s processing power — in other words, one organization was on the verge of dominating the emission of Bitcoins. Commentators on Bitcoin forums began to worry that if GHash.io gained a 51 percent share, it would be able to reverse transactions and make it possible to pay twice with the same Bitcoins. Such centralized power could render the currency useless.