The leaderless ethereum project lauded for its “immense cash reserves,” is now on a mad dash to recover close to $60 million worth of ether stolen from one of its wallets.
Ethereum, as we all know, is built on the same system that powers its cousin bitcoin—the blockchain, which makes use of cryptography to hold and spend money instead of the traditional bank or credit card companies. But unlike its cousin, ethereum pushed the blockchain even further by allowing developers to build codes on top of a blockchain ledger.
The idea is experimental, but it has managed to catch the attention of some of the virtual currency’s biggest investors. The DAO, which stands for the distributed autonomous organization, is the “leaderless organization” that has managed to raise $1602 million worth of ether.
But DAO’s success has also caught the eye of someone else. Someone more sinister.
On Sunday, users of the ethereum cryptocurrency woke up to some very alarming news: DAO lost 3.6 million ether worth $53 million to an attack that took advantage of a code issue, allowing it to drain some of the so-called “child DAOs”—a grouping that members can split off from the network for various purposes.
In theory, the bug is supposed to help DAO “escrow accounts to be emptied out through a balance-check mechanism,” according to The Verge. But the contract programs where the bugs are located were not part of ethereum’s core code, but was instead built on top of the system.
Former Bitcoin Foundation chairman Peter Vessenes and other researchers have already raised the issue of the bug, which Vessenes referred to as “the ultimate test of defensive software engineering.”
Now, ethereum developers are in a hurry to plug the ether drain. Ethereum co-founder Vitalik Buterin already called for a pause in trading in ether markets and for DAO tokens while developers have started patching the bug, but there’s still the missing $53 million.
Fortunately, developers could still see where the money is right now, and thanks to the nature of the DAO contracts, $53 million is also stuck in a holding account for the next 27 days. Beyond that, it’s up to the attacker if he wants to walk away with it.
Current bitcoin price and transaction volume
The news has caused the price of ether to drop below $13 on Poloniex.
Bitcoin, on the other hand, continues its climb towards $800 price mark. The digital currency traded at a high $759.89 on Sunday, with 15.67 million bitcoins in circulation.