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Tuesday, March 4, 2014

What the 'Bitcoin Bug' Means: A Guide to Transaction Malleability

What the 'Bitcoin Bug' Means: A Guide to Transaction Malleability



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This week, a term emerged that many bitcoiners won’t have heard before: transaction malleability. Mt Gox cited itas a key reason for suspending withdrawals, and it was also mentioned as the basis for an exploit used in amassive attack against the bitcoin network this week. So, what is it, how does it work, and should we be worried? Here’s what we know.

What is transaction malleability?

It’s an attack that lets someone change the unique ID of a bitcoin transaction before it is confirmed on the bitcoin network. The change makes it possible for someone to pretend that a transaction didn’t happen, if all the right conditions are in place.

Is it the same as double spending?

No. Double spending involves spending coins once, then creating a different transaction with those same coins before the first transaction is confirmed. The trick is then to get the fraudulent transaction confirmed on the bitcoin network first, so that the first transaction didn’t happen. That effectively means that you get to spend them twice.

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