A $50 million heist calls a new virtual currency into question. What should Ethereum do about it?
Despite claims of security Bitcoin and other digital money systems have leaked millions. You tell me: How can this be fixed?
On June 17, thieves made off with $50 million of virtual currency. It was stolen from investors who’d sunk their savings into the Decentralized Autonomous Organization, or DAO. As the largest crowdsourced project to date, this strange investment vehicle had amassed more than $150 million of Ether, a currency inspired by Bitcoin. DAO investors were attracted to the idea that DAO could act as a democratic tech-enabled venture fund that let investors weigh in on investments through online polling.
Earlier in the week, Backchannel published a lengthy profile of Vitalik Buterin, the youthful genius behind Ether as well as Ethereum, and the nonprofit that supports it. Tech writer Morgen Peck conducted more than a dozen interviews in her effort to take readers inside the mind of the 21 year-old coder, and she spent a good amount of time with him. Toward the middle of the piece, he shares his initial optimism for the project:
“When I came up with Ethereum, my first first thought was, okay this thing is too good to be true and I’m going to have five professional cryptographers raining down on me and telling me how stupid I am for not seeing a bunch of very obvious flaws,” Buterin remembers. “Two weeks later I was extremely surprised that none of that happened. As it turned out, the core Ethereum idea was good, fundamentally, completely, sound.”
That was five days before the heist. The Ethereum code was supposed to be tamper proof — to eliminate the need for us to trust humans blindly. So much for building a system beyond human fallibility. Cryptographically, the systems may be secure, but in implementation, they obviously are not. And that calls into question the entire category of these trendy new currencies. Now the question becomes, how should Ethereum fix this? Hell, should Ethereum try to fix it at all?