Digital Currency Ethereum Is Cratering Amid Claims Of a $50 Million Hack (businessinsider.com)

Digital currency Ethereum's value has dropped amid a hack on DAO (Decentralised Autonomous Organisation), an organisation with huge holdings of Ethereum (Wikipedia page). Its value is now below $15, down from more than $21 a few minutes ago. It is believed that as much as $50 million of the digital currency has been stolen. From a blog post on DAO: An attack has been found and exploited in the DAO, and the attacker is currently in the process of draining the ether contained in the DAO into a child DAO. The attack is a recursive calling vulnerability, where an attacker called the "split" function, and then calls the split function recursively inside of the split, thereby collecting ether many times over in a single transaction.From a Quartz report: It's no surprise that cryptocurrency markets are in a panic. Funds invested in the DAO represents more than 10% of all the ether in circulation ($81.8 million worth). A massive hack on the DAO's holdings would be roughly equivalent to a successful heist at a major financial institution.

Comments

This Summary Is FUD

[Anonymous Coward]

The fact that this bug occurred is a black mark on DAO and an utter embarrassment, but nothing has actually been "stolen". As the DAO blog post says, a community effort is underway to fork and lock out the attacker. They have a month to make it happen. No money will be lost.

Basically, this system is based on programming contracts (think legal contracts, usually written by lawyers and reviewed by judges). Someone left a bug in the contract, and because this is a programmed contract, not a written one, no one could enforce the "spirit" of the contract over the exact (erroneous) content of the contract.

This huge community panic and fork undermines the idea of these "programmed" contracts, and thus the system itself.