The DAO hack: $US50 million lost
June 20, 2016
Shah Sheikh (1294 articles)

The DAO hack: $US50 million lost

The cryptocurrency experiment that raised over $US150 million worth of cryptocurrency last month has been hacked, putting into sharp focus how far decentralised networks have to go before they can be safely used by the masses.

The DAO, or Decentralised Autonomous Organisation, was hacked on Friday evening and had 3.6 million ether, the equivalent of more than $US60 million, diverted from the main fund to another.

Founders of the fund have announced they will wind down the experiment and attempt to retrieve the lost ether.

“The DAO’s journey is over but all funds are safe,” said Stephan Tual, the founder of Slock.It, the group that created DAO. “All stolen funds will be retrieved from the attacker.”

The DAO is a leaderless organisation run entirely by computer code. Participants use tokens to vote on upcoming company decisions.

Digital contracts

Built on the Ethereum network, the fund aimed to use self-operating digital contracts to create a venture-capital fund that would sponsor fledgling cryptocurrency projects.

To become a voting member, one could buy DAO tokens in exchange for bitcoin-style currency ether. Over a period of a month, $US162 million worth of ether was raised.

The value of ether has since plunged since Friday’s hack. Ether had been fetching $US21 prior to the attack and within two hours it had fallen 38 per cent to $US13. On Sunday morning it was trading at $US11.13.

The most famous example of a cryptocurrency hack was the collapse of bitcoin exchange Mt Gox, which was hacked in 2014 after hundreds of millions of dollars worth of bitcoin was siphoned out.

Source | SMH