A software upgrade has led to invalid elements being introduced into Bitcoin’s public ledger system
The Bitcoin digital currency network is warning users of invalid bitcoins that began circulating over the weekend due to a problem with a planned software update.
The problem affects bitcoin transactions dated after midnight on Sunday, and is ongoing as of Monday morning, according to the Bitcoin Foundation. Because of a problem with the block chain, Bitcoin’s public ledger system, users may be vulnerable to double-spending glitches – accepting currency that may have already been spent elsewhere.
Users are recommended to update to the most recent versions of bitcoin clients, such as Bitcoin Core versions 0.9.5 or later, which are not affected by the problem, the organisation said. Users of other wallet software should set it not to trust transactions that have less than 30 “confirmations”, the system by which transactions are verified as legitimate. Ordinarily a transaction can be accepted with only six confirmations.
“There has been a problem with a planned upgrade,” the Foundation said in an advisory. “The problem is miners creating invalid blocks. Some software can detect that those blocks are invalid and reject them; other software can’t detect that blocks are invalid, so they show confirmations that aren’t real.”
A block is a group of accepted transactions recorded in the block chain, and is propagated to all Bitcoin nodes, in order to prevent double-spending. The block chain is in principle kept consistent and complete by “miners” who use a time-consuming cryptographic process called “mining” to generate it in such a way as to make it unalterable.
The current problem resulted from the implementation of new cryptographic rules for the generation of new blocks, which occurred early on Saturday morning, according to the advisory. Shortly afterward, an invalid block using the old method was introduced to the block chain, and some miners began building blocks on top of the invalid block, the advisory said.
The glitch has meant that some miners have lost $50,000 (£32,000) in income due to processing power wasted on the generation of invalid blocks, according to the Bitcoin Foundation. Bitcoin miners are rewarded by new bitcoins and processing fees for the generation of new blocks.
Many miners use a technique called Simplified Payment Verification (SPV) which doesn’t fully validate blocks, and it is these systems that are particularly susceptible to accepting invalid blocks, according to the organisation. One possible solution to the problem may be to at least temporarily shift these miners to full validation until the invalid blocks have been eliminated, according to the advisory.
In the meantime, the Foundation said it recommends users to continue to require the higher number of confirmations.
Bitcoin has been associated with websites selling outlawed goods, such as the defunct Silk Road, due to the difficulty of tracing the currency. However, it is increasingly accepted by major banks, with Barclays last month signing up to trial Bitcoin in its branches.
In May Goldman Sachs became the first major Wall Street bank to invest in bitcoin, leading a $50 million (£33m) round of funding for mobile payments start-up Circle Internet Financial.
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