OKCoin Chief Researcher: The Difference Between TheDAO Incident and Mt.GOX Incident

OK Inc. Vice President and Chief Researcher Duan Xinxing commented on the recent theft of 3.5 million Ethereum coins from the DAO.

Q: What are the similarities and differences between the theft of 3.5 million ethers from DAO on the Ethereum blockchain and the theft of Mt.GOX bitcoins on the Bitcoin blockchain in 2014? Why is this time so controversial?

A: Let’s use sending red envelopes as an example: when the bitcoins of Mt.GOX exchange on the bitcoin blockchain were stolen, it was like a bunch of people sending red envelopes online on WeChat. Hackers came to attack, but found that they could not break through, so they teamed up with the network administrator to steal everyone’s computer accounts, and of course the red envelopes were also stolen. The result was: the Internet cafe and the network administrator (Mt.GOX) later collapsed, but everyone still sent red envelopes on WeChat (no one has been able to break its code in the past 7 years). After Mt.GOX collapsed due to the theft, OKcoin quickly replaced MT.GOX and became the world’s largest bitcoin exchange because of its safe and stable services.

The theDAO’s ether was stolen on the Ethereum blockchain: it’s like a bunch of people playing a super complex and sophisticated gambling game (DAO), and they found out that according to the gambling rules: after 27 days, no matter what, all the money will be won by one person. Because he understood and “cleverly” used a loophole in the gambling rules. At this time, the majority of gamblers were boiling with resentment, “This won’t work!” The boss of the casino (Ethereum) jumped out and said, “Don’t panic, we will change the rules. As long as half of the people agree, we can change it immediately. We must not let that guy take all the money away.” Of course, the casino cannot be blamed for this. The main problem is the loophole in the rules of this gambling game. But then again. In fact, the casino cannot escape blame. Because at that time, the casino’s most proud promise was that it could have a rich and colorful gambling rules (smart contracts), and based on these gambling rules, it developed a variety of gambling games. After this incident, the gambling game (DAO) suffered a fatal blow, but the casino’s reputation and credibility were also affected by not following the rules.

What’s even more terrible is that two months ago, all of this was unfortunately predicted by Gavin Andresen, the second-highest figure in the blockchain industry. (Note: The top figure is of course Satoshi Nakamoto, and Gavin Anderson was the Bitcoin and blockchain core team maintainer designated by Satoshi Nakamoto.) Anderson once gave an online speech to Chinese listeners on the evening of April 21 this year. At that time, everyone thought he was too much, and seemed to favor Bitcoin and reject Ethereum, but today, it seems that he was right.

Let’s restore Anderson’s conversation at Babbitt’s AMA:

“ Q: What do you think about Ethereum? Can Bitcoin achieve all the same functions claimed by Ethernet? Thank you

What do you think of Ethereum? Can what Ethereum claims be realized on Bitcoin? In other words, can Bitcoin itself technically realize what Ethereum wants to achieve? Thank you.

A: I think most of the interesting things you can do with Ethereum you can also do with multi-signature Bitcoin transactions. I haven't seen a really great use of Ethereum yet, and I think there will be a big problem with Ethereum smart contracts that are designed to steal people's money, because very few people will have the skill necessary to tell if a complicated smart contract is correct. I'm watching the rootstock.io project, which brings Ethereum contracts to Bitcoin.

It’s interesting that most of the functionality of Ethereum can be implemented with Bitcoin’s multi-signature transactions. I haven’t seen a good application of Ethereum yet. I think Ethereum’s smart contracts can be designed to steal users’ funds, which would be a big problem because only a few people have the ability to identify a complex smart contract. I’m closely following a project called rootstock.io, which is trying to bring Ethereum’s smart contracts to Bitcoin.”