The founders of the Bitcoin designed the digital currency in such a way that no government or centralized authority would be able to control it. However, as the value of the digital currency continues to rise to nearly $1,000 recently, there is a race to gain a foothold over Bitcoin emissions, Bloomberg View contributor Leonid Bershidsky reported.
As Bitcoins become more difficult to mine, home computers were not anymore enough. High-performance graphic cards became the preferred tools, with most of the mining performed in application-specific integrated circuits that specialize in mining the currency. Miners themselves establish pools that would enable them to get small but steady profits rather than the sporadic but impossible large payoff, the report said.
A particular mining pool which is called GHash.io and managed by a company called CEX.io, took the idea to another level by offering something similar to shares in an operation that has specialized hardware to mine the digital currency. Potential miners only had to pay their share of the computing power and just wait for the income to start coming in.
However, there were independent miners last week that realized that GHash.io already held 45% of the processing power of the Bitcoin network. This means that a single organization nearly dominated Bitcoin emission, the report said. Commentators on Bitcoin forums expressed concern that if GHash.io would get a 51% share, it would give the miner centralized power that could devalue the Bitcoin.
GHash.io immediately quashed the concern and said it had no plans of making the "51% attack." It closed its doors to independent miners and gave its users permission to mine for others. The move brought down GHashi.io's share of the Bitcoin network's processing power to 34%.
The report said CEX.io is a secretive firm. Information gleaned from his LinkedIn profile showed Jeffrey Smith, the company's Spokesman and Chief Information Officer, as a resident of Ukraine. His profile said that he graduated from the International Christian University in Kiev, Ukraine, the report said.
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