More than $50 million in Ethereum stolen, causing Bitcoin to drop 10%

Today, the U.S. market woke up to the news that "The DAO, the decentralized organization for Ethereum, was hacked, and more than $50 million worth of Ethereum leaked out of the DAO wallet."

The market price of Ethereum shrank instantly, falling from a record high of $21.50 to $15.28, a drop of more than 23%. The price of Bitcoin, which recently hit a two-year high, was also affected, falling 10% from more than $775 to $757.8. This week, Bitcoin has soared 30%, more than 70% in the past month, and an astonishing 200% increase since the beginning of the year.

The following figure shows the price of Ethereum:

Over $50 million in Ethereum stolen

What is Ethereum? It is a decentralized digital currency similar to Bitcoin, which also allows decentralized institutions to be built on its blockchain. Currently, the four major digital currencies on the market are Bitcoin, Ethereum, Ripple, and Litecoin, and their combined market capitalization exceeds 95% of the total market capitalization.

The DAO is one of the decentralized institutions of Ethereum. According to Business Insider, DAO holds tens of millions of Ethereum and has a total value of about $132.7 million in Ethereum.

The DAO was attacked on Friday morning, with more than $50 million in ether leaked out. The attacker was gradually transferring the ether held by The DAO to a child DAO. According to Ethereum officials, the attacker exploited a recursive call vulnerability, triggering a split during the execution of The DAO's split method, and withdrawing multiple ethers in one transaction.

Ethereum officials said: "This vulnerability only affects The DAO, and Ethereum itself is completely safe. The developer community is proposing a soft fork. There will be no rollback, and no transactions or blocks will be revoked. The soft fork will treat any transaction related to The DAO and child DAO as invalid transactions starting from block height 1760000, thereby preventing the attacker from withdrawing the stolen Ethereum after 27 days. After this, there will be a hard fork to recover the Ethereum."

US financial blog Zerohedge reported that the stolen Ethereum is worth $59 million. Business Insider said that if calculated at the price before the theft, the stolen Ethereum is equivalent to $79.6 million.

Vitalik Buterin, one of the developers of Ethereum, proposed a solution to prevent the stolen assets from being used. Currently, the stolen currency is locked in such a child DAO. Even if no action is taken at present, the attacker will not be able to take these coins within 27 days.

Was this attack a vulnerability in decentralized organizations, not Ethereum?

Someone on the US Slack website said that the theft of Ethereum was the decentralized organization Dao’s own problem.

“You can’t roll back and drag the whole of Ethereum into this incident. The fault lies entirely with The DAO, not Ethereum. Let the DAO fix the whole thing. Ethereum will recover, there is nothing wrong with it.”

The DAO is a venture capital organization based on the Ethereum public blockchain platform. In April this year, it raised funds from the public and raised 12 million ethers in 27 days, worth $132 million, the largest crowdfunding campaign in history. The project officially started operations in May.

Before the theft of this batch of ether, community users discovered that the way developers used smart contracts led to a vulnerability in Ethereum, affecting the security of DAO. Three experts pointed out that there were doubts about the structure of the DAO project and proposed to suspend DAO's financing.

After the attack, the Ethereum Foundation proposed to suspend electronic currency trading due to the attack. Kraken, a digital currency trading platform based in San Francisco, said that the attack would not affect Kraken, but out of caution and the request of the Ethereum Foundation, it would suspend withdrawals to prevent other ether from flowing out of DAO through Kraken. Kraken previously announced that it would provide pairing for DAO and would become the first trading platform to list DAO tokens.

The China Bitcoin Exchange Center also announced the postponement of DAO online trading.