Bitcoin, Ethereum not as decentralized as expected: DARPA

Paigambar Mohan Raj
Source: CNBC

According to security company Trail of Bits, distributed ledger technology (DLT) and blockchains like Bitcoin (BTC) and Ethereum (ETH) may be more susceptible to centralization problems than previously anticipated.

The firm released a study on Tuesday (21st June) titled “Are Blockchains Decentralized?” commissioned by the U.S. Government’s Defense Advanced Research Projects Agency or DARPA.

The security company’s key conclusions included the possibility for different players to obtain excessive, centralized control over the network due to outdated BTC nodes, unencrypted blockchain mining pools, and a majority of unencrypted Bitcoin network traffic passing through only a small number of ISPs.

Are old Bitcoin nodes vulnerable?

A subnetwork of Bitcoin nodes, according to the research, is primarily in charge of achieving consensus and interacting with miners. The vast majority of nodes do not substantially contribute to the network’s health.

Additionally, it was discovered that 21% of BTC nodes were using an outdated version of the Bitcoin Core client, known to have security issues, including consensus problems.

The investigation also revealed that the Stratum mining pool technology for Bitcoin is not secured and is effectively unauthenticated. This implies that malicious attacks may be launched to estimate a miner’s hashrate and rewards and to modify Stratum messages to deprive other miners of their CPU time and payouts.

Other vulnerabilities

The study also found flaws in the infrastructure, based on the fact that the Bitcoin protocol communication is not encrypted and that only three ISPs account for 60% of the network traffic. The ability of ISPs and hosting companies to unilaterally reduce or refuse service to any node makes it a major concern.

After Solana raised worries about centralization, the study arrived at a critical time. The decentralized finance (DeFi) lending platform Solend, located in Solana, put together a governance plan on Sunday to take control of a whale’s wallet that was in danger of being liquidated and endangering Solend and its customers.

At press time, Bitcoin (BTC) was trading at $20,280.59, down by 3.5% in the last 24 hours.