$80 Million Hack Shows the Dangers of Programmable Money
Ethereum aptly named.
Money is getting easier and easier to control via software and the Internet. A spectacular hack against an investment fund that put over $130 million of assets in the control of software shows that the concept comes with significant downsides.
The Decentralized Autonomous Organization—or DAO—was built on top of a system of digital currency called Ethereum and had become the largest crowdfunding project in history. The DAO’s software was designed to dole out funding to projects based on voting by people who had funded it. It was held up as an example of the incredible new things made possible by Ethereum, which was inspired by Bitcoin but intended to allow software to control money.
Early on Friday someone began exploiting a flaw in Ethereum’s design to extract more than 3.6 million Ether from the DAO—an amount worth around $80 million by the currency’s value immediately before the attack. (The price has since dropped significantly.)
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