Bitcoin, the first cryptocurrency, has gone through several existential risks since it was created. These include regulatory crackdowns, security breaches, market volatility, technological challenges to the network itself, and scalability. All of these have, at different times, greatly reduced investor confidence and the stability of the Bitcoin network.
It has been highly criticized, with some even doubting the existence of Bitcoin during bad moments of extreme downturns or security breaches, thus panic among many and a drastic fall in its value.
The Bitcoin network has shown great resilience in the face of such challenges. As a decentralized platform, it is supported by an international network of miners and nodes that ensures no single point of failure can bring it down. In view of these risks, the community behind Bitcoin—the developers, miners, and users—also plays a very key role through improvement and adaptation. Such a platform of decentralization, together with the open-source nature of Bitcoin, forms a basis for collective problem-solving and innovation.
Second, in Bitcoin’s decentralized and transparent nature, security flaws are detected within the shortest time and resolved. When major exchanges and wallets were hacked, it drew the community and developers to work together in hardening security, culminating in more secure practices and technologies, such as multisignature wallets and hardware wallets.
The third factor that has contributed to decreasing the risk of a government crackdown is regulatory engagement and advocacy. Through proactive efforts, organizations and key people in the Bitcoin community are able to provide regulators with education about the benefits and potential of Bitcoin. As a result, more informed and balanced regulatory frameworks have been formulated. This process continuously decreases legal uncertainties and fosters a more conducive environment for the growth of Bitcoin.
This incentivizes a structure of pressure for miners and a halving event, hence exerting a deflationary pressure on Bitcoin that has made it very useful for storing value and hedging against inflation.
It has somehow managed to survive through many near-death experiences. Why? Because it is resilient and adaptive. Constant improvement of technology, enhanced security measures, proactive regulatory engagement, and an economic model make up Bitcoin as it conquers the challenges thrown at it and holds its top place in the cryptocurrency rankings.
Bitcoin has been declared “dead” several times by skeptics, but it has truly gone through many challenges. Among the threats it encountered, one of the most devastating was in 2018 when a critical bug nearly undermined the whole Bitcoin network. This article explains the bug, its discovery, and the measures taken to protect Bitcoin.
The First Bug Encounter
An anonymous reporter, on September 17, 2018, identified a critical bug in Bitcoin’s validation software, Bitcoin Core. The described bug reported by the reporter allows miners to shut off parts of the Bitcoin network by trying to conduct a double-spending transaction in a special way. First described as a denial-of-service vulnerability, the bug had actually dated back to the release of Bitcoin Core version 0.14 in March 2017, though it was discovered only in 2018.
Upon the discovery of the bug, Bitcoin Core developers acted quickly and issued a patch within 24 hours. The miners and node operators were then asked to patch their software. By September 20, most miners and node operators had updated their systems, closing the vulnerability.
The Second Bug Encounter
The first patch gave the impression that this bug was finally killed, but further probing brought out a much more dangerous aspect of the same bug. Bitcoin Core developers found that the same bug had been hosting a second vulnerability that could seriously compromise Bitcoin’s integrity.
According to this in the disclosed issue report dated September 20, 2018, nodes running Bitcoin Core 0.15 through 0.16.2 would not crash because of a double-spending transaction. Instead, it would treat the double-spend as valid. This vulnerability meant that, hypothetically speaking, an attacker could create a practically unlimited number of new bitcoins, bypassing the hard-coded 21 million supply limit.
The Consequences
That’s to say, one of Bitcoin’s basic properties should be the prevention of double-spending, required by the preservation of the integrity and scarcity of a cryptocurrency. An exploit allowing unlimited bitcoin creation would have devastated the value and trustworthiness of the currency.
Aftermath
After the bug was disclosed, Bitcoin Core developer Pieter Wuille reassured the community that full nodes with this version of the software would be able to spot suspicious activity simply by checking the entire blockchain history. By doing so, it could detect and proactively work on averting an unauthorized creation of bitcoins.
A concern remained, however, as to what could have happened had the bug been exploited before the fix. Historical precedent suggested a potential solution. In 2010, an exploit permitted the creation of 184 billion BTC out of thin air. The response was prompt: within just five hours, a soft fork was rolled out reverting the blockchain into the state it was before the exploit and patching the overflow bug.
Bugs are part of any software system, including Bitcoin. That said, as the world’s biggest open-source blockchain, Bitcoin has an unrivaled amount of eyes from developers across the world. This, in turn, gives an open setting for quicker detection and resolution of bugs compared to closed-source systems. The 2018 bug scare attested to community efforts and Bitcoin’s resilience against the most potent threats.
Although this threat was formidable, the decentralized and open-source nature of Bitcoin made sure that the bug was very fast to identify and patch; thus, there were no headaches as far as the integrity of the network was concerned. For now, Bitcoin continues to survive and thrive, thanks to its dedicated developers and vigilant community.
