The DAO, a bold experiment in blockchain decentralisation has been hacked resulting in $50 million dollars worth of digital currency stolen and the future of Ethereum in doubt
A startup working on building a Decentralized Autonomous Organisation, aptly named ‘The DAO’ has been hacked. The DAO was being developed and programmed by the team behind Slock.it with the aim to build a human less venture capital firm that would allow investors to make decisions through smart contracts.
The attack occurred in the early-morning hours on Friday after $150 million dollars was successfully raised from thousands of different people. The unknown attacker stole a reported $50 million dollars worth of Ether digital currency.
Despite the attack being made possible by a technical flaw in The DAO software, not the Ethereum platform itself, developers and founders of Ethereum have been scrambling to save investor funds and confidence in the Ethereum platform.
In a statement, Vitalik Buterin, founder and creator of Ethereum assured investors saying “this is an issue that affects the DAO specifically; Ethereum itself is perfectly safe”.
In response, Ethereum developers have proposed a way to neutralise the attacker in the form of a ‘soft fork’, which will freeze the attacker’s funds, followed by what is referred to as a ‘hard fork’ that will roll back all of the transactions which appeared after the hack was identified. The founders of The DAO fund have been forced to shut the project down.
The hack comes as a shock to investors and the wider blockchain community and poses fundamental questions that are central to the future of Ethereum and blockchain. Because Ethereum is based on blockchain technology, where all transactions are meant to be irreversible and unchangeable, executing a hard fork and rewriting the blockchain sets a dangerous precedent that goes against blockchain’s central value proposition.
While the immediate future of Ethereum remains unknown, appeasing both nervous investors and the Ethereum community looks set to be an almost impossible task.