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10 Unauthorized Facts About Ethereum, DAO & The Missing $60 Million

The second largest blockchain crowdsale of all time is Ethereum. Ethereum is a blockchain system based on smart contract technology which seeks to remove humans from the nature of contracts. It is run by a virtual machine, which is a distribution of computing power run in a Bitcoin-type network. Miners in this distributed network are rewarded in ether, a Bitcoin-inspired digital currency that Ethereum proponents refer to as the “fuel” of the network.  This is similar to how Bitcoin miners are rewarded with Bitcoin.

Developers of Ethereum thereafter led the launch of the DAO, which subsequently surpassed all crowdsales and became the largest crowdsale of all time, raising $164,000,000.

What form Ethereum and the DAO will take in the future is not known, but the developers call it “revolutionary.” Big banks seem to agree, as Ethereum certainly is a use case of which R3, IBM and others have taken note.




Yet, not one month after the end of that sale, an exploit in the code-  known generally as a  – drained the DAO of $60 million in ether. Here are 10 unauthorized facts about Ethereum, the DAO and the exploit.

 

  1. The DAO is the largest crowdsale of all time

  2. The DAO states “In exchange for their early help, participants receive DAO tokens which hold many benefits.”

  3. Media reports say the hacker claims this was a team project, and that “I’m not a hacker; nothing was hacked.” These reports cannot be cryptographically verified.

  4. The DAO developers maintain that participants can make “important decisions relating to the management of the DAO,” so, in the logic of such a crowdsale, all ether buyers share guilt for the exploit.

  5. But, there is no good way to inform of possible bugs.

  6. Developers had noted the exploit in various documents prior to the hack but Ethereum developers did not act.

  7. Ethereum’s plan to become proof of stake means attackers could hold voting power over the “Virtual Machine” that is Ethereum in the future.

  8. Ethereum developers plan a “white hat hack” or a fork in order to neutralized the other actions, and launch a new chain.

  9. Ethereum co-founder Gavin Wood said of the hack and possible hard fork: “It’s the most important [academic] case in crypto economics since the birth of bitcoin, yes”

  10. Ether, Ethereum’s native digital currency, is the second largest Bitcoin-inspired cryptocurrency or token.




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