Recently Discovered Bitcoin Vulnerability Is Even Worse Than Previously Thought

Siamak Masnavi

On Monday (17 September 2018), a vulnerability (known as CVE-2018-17144) in Bitcoin Core (Bitcoin's reference implementation), which had existed since version 0.14.0 of Bitcoin Core (released on 8 March 2017), was reported to developers working on Bitcoin Core as well as some projects supporting other cryptocurrencies that use this code (such as "Bitcoin ABC" and "Bitcoin Unlimited", the two leading full node implementations of the Bitcoin Cash protocol). This vulnerability was reported anonymously as a "Denial of Service" (DoS) bug. 

As covered by CryptoGlobe, Bitcoin Core developers came up with a fix for this bug the next day (18 September 2018), and released it as part of Bitcoin Core versions 0.16.3 and 0.17.0rc4. They urged anyone running vulnerable versions of Bitcoin Core (i.e. 0.14.0 up to and including 0.16.2) to upgrade to version 0.16.3 as soon as possible.

However, shortly after fixing the vulnerability, the Bitcoin Core developers discovered that the bug in the code causing the DoS problem was even more serious than previously thought because it also created a second problem: the same vulnerability could be exploited to inflate the Bitcoin supply (i.e. create new bitcoins, beyond the 21 million limit placed by Satoshi, which would have the effect of devaluing existing bitcoins). 

This meant that the code fix for the DoS bug would also take care of the supply inflation bug. But, probably in order not to cause panic, and to encourage quick upgrades, the developers decided to only disclose the DoS bug.

On September 20th, after a post in a public forum revealed the full impact of the vulnerability, the Bitcoin Core Developers decide to come clean and publish a full disclosure report for CVE-2018-17144.

Over half of the Bitcoin hashrate has upgraded to patched nodes (running version 0.16.3). The developers say that although they are "unaware of any attempts to exploit this vulnerability", it is still critical that "affected users upgrade and apply the latest patches to ensure no possibility of large reorganizations, mining of invalid blocks, or acceptance of invalid transactions occurs."

Featured Image Credit: Photo via "Crypto360" via Flickr.com; licensed via "CC BY 2.0"

Fed Rate Cuts Will Likely Boost Bitcoin Says Deutsche Bank

Neil Dennis

The central banks of some of the world's largest economies are about to embark on interest rates cuts and this is likely to play into the hands of Bitcoin investors, says Deutsche Bank's Jim Reid.

Global growth is slowing, a result of falling business confidence as trade tensions around the world increase - led by the seemingly intractable tariff feud between the US and China.

Under Pressure to Cut

While these effects are starting to be felt around the world, the caretakers of the most powerful economy on earth - under severe politicial pressure from President Trump - are already looking towards monetary policy measures that will support growth.

The Federal Reserve has already turned dovish, and even though it left interest rates on hold at 2.25-2.5% at its May and June meetings, comment from Fed officials this week has left the impression a rate cut could soon be on the way.

In a speech on Tuesday, Fed Chairman Jerome Powell said:

The cross-currents have re-emerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy.

A further hint that the Fed was moving towards a quarter point rate cut at its July meeting was Powell's assurance on Tuesday that "an ounce of prevention is worth more than pound of cure".

Dollar Weakening

Insofar as rate cuts and other monetary easing policies from the Fed undermine the US dollar, such policy dovishness can be seen as supportive for Bitcoin's price versus the US currency (BTC/USD).

Jim Reid, multi-asset research strategist at Deutsche Bank said on CNBC on Wednesday that he thought the recent move in Bitcoin was emblematic of the current weakness in the dollar:

If the major central banks are going to be this aggressive then alternative currencies start to look more attractive.

Cryptocompetitor

Reid has been a long-time advocate of alternative currencies. He said back in November 2017, just before the massive Bitcoin rally that took the BTC price close to $20,000 that the use of virtual currencies should be promoted around the world as people lose faith in central banks' ability to control fiat currency.

He said:

Although the current speculative interest in cryptocurrencies is more to do with blockchain technology than a loss of faith in paper money, at some point there will likely be some median of exchange that becomes more universal and a competitor of paper money.