Winter came early for Ethereum — $150m worth of assets frozen by hack

News broke yesterday of a bug in the Parity client of Ethereum that has frozen Ether stored in a vast number of wallets within the blockchain. CoinDesk estimates that the current value of the losses could be as high as $150 million, although it’s difficult to estimate exactly due to a lack of information about how many wallets within the Parity client have yet been affected.

It seems that there is a lot of blame being thrown around to account for this recent attack. Many people are quick to highlight the fact that this was a hack on smart contract code written on top of the Ethereum blockchain, and thus reflects an issue with the creation and deployment of smart contracts rather than with Ethereum itself. Others, however, point to the core nature of Ethereum as an open source platform that allows people to code and deploy independent smart contracts as the problem. Regardless, the Ethereum community has some soul searching to do to figure out where the ongoing vulnerabilities are and how they can continue to work towards creating a more secure open source platform.

In the meantime, the people who have lost their assets in the blockchain are rightfully upset. So what’s the solution? Some are proposing a hard fork solution to re-write the ledger and return the stolen assets back to their rightful owners. This proposal, while seemingly likely to happen, is being met with considerable resistance and will not be carried out without the outspoken opposition from a large part of the ethereum community.

As more details about this hack continue to surface, and the community arrives at a decision regarding the hard fork, be on the lookout for volatility in the price of ether. At the time this post was written, ether was down nearly 2% over a 24 hour period; I’ll be looking for a good time to buy as the price of ether falls in the wake of uncertainty brought on by this hack.

Despite highly public hacks and vulnerabilities such as this one in the Ethereum platform, it seems highly unlikely to me that Ethereum is facing a threat to its existence or popularity. As is the case with all new technologies, there are large issues to work out in the process of building something that works, and the Ethereum team is hard at work to make the adjustments necessary to avoid large scale hacks in the future.

What are your thoughts about this hack? Do you think the future of Ethereum is being threatened by such a high profile vulnerability? Comment below!

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