The developers behind Ethereum are hacking the hacker that hacked it
Hacking is a two way street.
The core developers behind Ethereum, which supports a cryptocurrency similar to bitcoin, launched an assault on an anonymous hacker that stole at least $89 million through its network.
Alex Van Der Sande, lead designer for Ethereum, announced the counterattack on Twitter earlier today. Within four hours, the core developers were able to get back over 7 million of its ether currency, or $89 million, according to the wallet address where the funds are being stored.
The Ethereum developers are trying to retrieve money that had been invested in the Distributed Autonomous Organization (DAO), which raised $150 million in the largest crowdfunding project in history. The anonymous hacker posted an open letter that said he merely exposed a loophole inside ethereum’s smart contract system, and the funds were “claimed legally.” How much the hacker stole is still unclear.
The hack has shaken the faith in Ethereum, which has been attracting interest from corporations including IBM and Microsoft. There are theoretically other ways to retrieve the funds, but they could have also hurt the community’s trust in the network, as Quartz’s Joon Wong Ian wrote:
Stephan Tual, a co-founder of a startup called Slock.it, which helped create the DAO, says there’s one way to fix the problem and boost the ethereum economy’s robustness. Ethereum’s miners, who decide what transactions form the cryptocurrency’s permanent record, can collectively agree to do a “rollback”, rewinding the ethereum blockchain to some point before the hack happened. The transactions for the stolen funds would effectively be nullified and wiped from the record. “It shows the community can work together for the benefit of the common good,” says Tual.
This isn’t as crazy as it sounds. Bitcoin miners have performed at least one rollback, in 2010, to fix a technical glitch. But bitcoin was trading for pennies then, a far cry from the $11.5 billion-worth of bitcoin in circulation today. Ether at current prices is already worth serious money. All the ether in circulation today is valued at around $1.3 billion, at current prices.
Another question is whether a rollback dangerously undermines a cryptocurrency designed to be decentralized and beyond the control of any single party or group. Tual has an argument against that too. “You need to compare this to a central server of a bank, where they can just change numbers without anyone being aware,” he says.
“In this case, it’s completely different. If all the miners come together and [do a rollback], it’s a community action. And it’s transparent, completely transparent.”