On Monday, the Bitcoin world had a meltdown as the cryptocurrency’s network started to slow down seemingly without explanation, leaving people’s transactions in digital limbo.
Now, it looks like at least part of the reason for the slowdown might be a concentrated attack on Bitcoin by unknown actors.
The issue is that the digital “blocks” that contain every Bitcoin transaction are being filled up. Transactions are put into blocks by Bitcoin users, who are incentivized in part by fees that people attach to their transactions. Transactions aren’t complete until they’re put into blocks, or “confirmed.” But with near-full blocks, there’s more competition for space inside them, and so miners logically seek out the transactions with a decent reward attached before those that don’t—meaning those who are willing to pay more in fees will get their transactions confirmed first.
“This would seem to imply that a single wallet or set of wallets is potentially sending the same coins over and over, to themselves”
Transactions without a reward are thus left to languish in what’s known as the “memory pool,” which is stored on every computer running Bitcoin software. When that memory pool fills up, the whole system slows down, and that’s exactly what’s happening right now. The question now is why.
According to longtime Bitcoin developer Jeff Garzik, someone might actually be taking advantage of fuller blocks with an attack that artificially pushes the system over the edge.
“There is an uptick in correlated transactions in the lower fee strata,” Garzik wrote me in an email. “This would seem to imply that a single wallet or set of wallets is potentially sending the same coins over and over, to themselves. This may be innocent transaction activity, coin ‘tumbling,’ or an unknown actor paying transaction fees to load the bitcoin network with traffic.”
However, he added, “It is one of those unknowables.”
On Tuesday, chief information officer of Bitcoin company BitFury Alex Petrov retweeted a tweet calling attention to a Bitcoin address he believes is sending coins to itself and referring to them as “loops.” It is “malicious spam,” he also tweeted.
Block size has been on an upward trend for a very long time, however, and so has the number of transactions going through the network on any given day. This has led to some users and developers to describe the current situation as Bitcoin’s “new normal,” and a detriment to average people using the cryptocurrency. After all, when you use cash, you don’t have to pay an extra cent or two for the privilege.
Currently, nobody has claimed responsibility for any attack on Bitcoin either on Reddit or on forums like BitcoinTalk, unlike nearly every other attack in recent memory, lending credence to the assumption that the slowdown is due to people using bitcoin exactly as they should.
Garzik said the data science team for his bitcoin startup Bloq are monitoring the situation. But for now, bitcoin users are reporting transactions taking hours upon hours to be confirmed—that is, to complete—and requiring high transaction fees in order to have their transactions included in a block.
Attack or not, the result is the same: being a bitcoin user has got to be really fucking annoying today.