Bitcoin 'mining pool' promises to stay small - WDRB 41 Louisville News

Bitcoin 'mining pool' promises to stay small

Posted: Updated:
  • U.S. & World NewsMore>>

  • Honduran families deported back to a bleak future

    Honduran families deported back to a bleak future

    Wednesday, July 23 2014 7:44 PM EDT2014-07-23 23:44:48 GMT
    Elsa Ramirez already had lost two brothers to violence in this remote Caribbean region when co-workers handling clandestine cocaine flights from South America murdered her husband four months ago.More >>
    Elsa Ramirez already had lost two brothers to violence in this remote Caribbean region when co-workers handling clandestine cocaine flights from South America murdered her husband four months ago.More >>
  • House, Senate advance competing border proposals

    House, Senate advance competing border proposals

    Wednesday, July 23 2014 6:43 PM EDT2014-07-23 22:43:57 GMT
    Senate Democrats and House Republicans are moving separately to slash President Barack Obama's $3.7 billion emergency spending request for the southern border, but they're unlikely to end up with a deal...More >>
    At an impasse on immigration, House Republicans and Senate Democrats advanced competing proposals Wednesday for dealing with tens of thousands of young migrants showing up at the southern border. Each side quickly ruled...More >>
  • Calls for troops at border echo previous pushes

    Calls for troops at border echo previous pushes

    Wednesday, July 23 2014 6:26 PM EDT2014-07-23 22:26:59 GMT
    Texas Gov. Rick Perry was speaking to voters in Iowa as much as Texas when he deployed as many as 1,000 armed National Guard troops to the Mexican border in South Texas.More >>
    When Texas Gov. Rick Perry announced the deployment of up to 1,000 armed National Guard troops to the Mexican border he was speaking to voters in Iowa as much as Texas.More >>
By PETER SVENSSON
AP Technology Writer

NEW YORK (AP) - The largest group of bitcoin miners, which maintains and processes transactions in the digital currency, is promising to avoid majority control of the currency as a temporary measure to maintain the payment system's credibility.

Mining pool GHash.IO, which is controlled by a British company, CEX.IO Ltd., said Tuesday that it would not amass more than 40 percent of the processing power of the bitcoin system. Earlier this summer, it briefly exceeded 50 percent.

Miners operate the computers that keep track of bitcoin transactions. As a reward, they receive newly minted coins. A miner that controls more than 50 percent of bitcoin processing could control the flow of transactions, freeze people out of the network and keep all future bitcoins for itself. However, that would undermine the usefulness and credibility of the system, potentially making bitcoins worthless.

Changes to the software have been proposed to avoid the problem of a "51 percent attack," but CEX.IO said it isn't "able to solve the problem in a long-term perspective, taking into account interests of existing mining pools, individual miners and bitcoin community."

The company is setting up a committee of major bitcoin market players to develop a technical solution for the problem.

Bitcoins allow people to send money over the Internet without going through banks. Transaction costs are low, but it also means the currency is useful for illegal activities such as money laundering and drug sales. Bitcoins have also become a target of speculators betting on the currency's continued run-up. Its value has grown a hundredfold in the last two years.

From a technical standpoint, bitcoins are sequences of numbers, painstakingly produced by computers churning through millions of calculations. Bitcoin transactions are recorded in a virtual public ledger, known as the blockchain. Miners are in charge of maintaining the blockchain.

One mining computer might take years to produce a single block of coins, and there's no way to know when that might happen. In pools, miners divide the bitcoins they create among themselves in proportion to the work done, providing with them with a steadier stream of income.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and WDRB. All Rights Reserved. For more information on this site, please read our Privacy Policy and Terms of Service.