The Ethereum DAO Hacking Spiral

In case you've been living under a rock ... or just living in the normal world where this stuff doesn't exist yet ... there's been an Ethereum compromise resulting in lost Ether and stolen from the DAO.

Just to update the situation, we've tossed together a quick summary.

What Happened?

There's much concern about the DAO (decentralized autonomous organization), Ethereum, and its token Ether (ETH). Many believe the DAO is now DOA after a hacker cracked in and swiped a 3rd of the 150+ million in Ether coin raised by the non-organization (5% of all Ether in existence). Ethereum and the DAO had so much promise and in one swipe the trust and faith in the network and the DAO was shattered.

Then Things Went Downhill 

After a slow drain of nearly $60 million smaller attacks occurred in addition to the disclosure of several more attacks that had previously happened of the same nature. The attack is called a "recursive call" attack where there is a vulnerability in the smart contract coding.

Then It Got Worse

To fix the problem, Ethereum developers presented a hard fork (code) which essentially provides a bail-out and blocks transactions. Kind of like going back in time and erasing a few things. This fired up a heated debate much like the block size debate of bitcoin fame earlier this year and late last 2015.

It Couldn't Get Any Worse...Could It?

If the situation wasn't bad enough, the DAO hacked back, defined as folks on behalf of the DAO acting as "good Samaritans", and hacked the hacker to steal the Ether back. This coming after Ethereum developers announced how it was done so the entire hacking planet is now aware of this information (so are developers of course).

Let's pause to review what this looks like to the rest of the planet. This looks like a network vulnerable to multiple attacks regardless if you're stealing or stealing what was stolen from you, which is still stealing, and a fork nobody can decide on (gee, that's sounds familiar) of which neither are exactly resonating confidence throughout the world of decentralized stuff that most of the world already thinks might not be safe and may have few issues here and there (hmmm ... wherever on earth do they get these crazy ideas from) so you can only imagine what they are all thinking. 

Things Go Further South

With a heated debate over a hard fork there was a brief glimmer of hope in the way of a soft fork release to block further funds from being sucked out of the DAO. This exposed another vulnerability, which means things are right back we're they started. Nowhere. 

The options are back to hard fork or watch the DAO burn to the ground.  Both of which have supporters and opposition. With the clock ticking the opposition may get their way, but it won't be a win since there will be no winner here. It doesn't matter what you do, everybody loses.

The best thing that can be done right now is to make a decision so it can be said and done because time is the only thing that is going to actually fix anything, but that is unlikely to happen within a time frame that could be useful. The more likely ending will be a growing pain.

Emphasis on pain.

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Report by dinbits

Image by dinbits.com staff

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