Allegations of Dirty Tricks as Effort to “Rescue” Bitcoin Falters

A controversial attempt to alter the design of the digital currency Bitcoin appears to be faltering—with some early adopters of a new version of the software behind the currency saying their computers have been attacked over the Internet in an attempt to stifle support for it.

Prominent Bitcoin developer Gavin Andresen released BitcoinXT, a modified version of the software that powers the currency, late last month. He fears that early next year Bitcoin will become unreliable because of its built-in cap on how many transactions can be processed per second—currently only about seven (see “The Looming Problem That Could Kill Bitcoin”).

Andresen’s work on Bitcoin is supported by the MIT Media Lab. His release of BitcoinXT was controversial because it bypassed the usual protocols for proposing changes to Bitcoin’s design via a small group of senior developers (see “The Man Who Really Built Bitcoin”). Instead, the new software has a kind of voting mechanism built in that puts Bitcoin’s fate in the hands of the community.

Bitcoin transactions are processed by people dubbed “miners” who run the Bitcoin software that adds new “blocks” to the digital ledger of Bitcoin transactions known as the blockchain, and also produces new bitcoins. If 75 percent of new blocks are made by BitcoinXT or other software adopting Andresen’s transaction-rate fix after January 11, 2016, it will trigger a two-week grace period. After that, Bitcoin’s blockchain will “fork” into a version with higher capacity. From that point on, bitcoins found by miners who don’t switch won’t be compatible with the BitcoinXT system.

Some supporters of Andresen’s fix say that attacks on computers running his software are being used to rig the debate and kill its support. One victim was the Czech company SatoshiLabs, which offers a service called Slush Pool that supports Bitcoin miners. The company enabled miners on the platform to signal support for the fix to transaction capacity built into BitcoinXT. But about a week ago it was hit by a denial-of-service attack, which overwhelms a system with incoming traffic.

Alena Vranova, director of SatoshiLabs, said the company received a message saying that the attack would end once it turned off the ability for customers to declare support for Andresen’s idea. SatoshiLabs was forced to comply with that demand because the attack was powerful enough to cause connectivity problems for some Slush Pool miners. “This is a destructive behavior,” says Vranova. “I would admire someone who stands out, explains, and promotes his idea. This is just cowardly.”

Another victim was the Web hosting company ChunkHost, based in Los Angeles. It didn’t receive a message, but the attack was focused on one customer who had recently switched the software powering a Bitcoin ATM to BitcoinXT.

“It seemed pretty clear. As soon as he switched, he got attacked,” says Josh Jones, a founder of ChunkHost. “Some people seem to be taking matters into their own hands.” Many people have complained online that they experienced similar attacks after they switched to BitcoinXT.

Reports of the attacks over the past week coincided with an apparent decline in the chances that Andresen’s activation threshold of 75 percent of blocks mined in support of his fix will be met. Some 8 out of 1000 blocks were mined in support of it last Monday, but the figure has since declined to only 1 out of 1000.

Despite some leading U.S. companies endorsing his ideas, Andresen has met opposition from other companies and leading developers. Alternative ideas about how to increase Bitcoin’s capacity—albeit generally not fleshed out in fully tested code—have been gaining momentum. One that uses a voting mechanism similar to Andresen’s is currently backed by more than 60 percent of mined blocks.

This post was updated 2.15pm EST September 9 to clarify the effect of the attack against Slush Pool.
This post was updated 12 pm EST September 14 to correct figures on blocks mined in support of different proposed changes to Bitcoin.