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Someone 'Accidentally' Locked Away $300M Worth of Other People's Ethereum Funds (vice.com)

Posted by msmash on from the not-the-onion dept.

On Tuesday, a single user "permanently" locked down dozens of digital wallets containing nearly $300 million dollars worth of ether, the unit of exchange on the Ethereum platform, allegedly by accident. From a report: Now, some in the Ethereum community are considering the possibility of a risky network split, known as a "hard fork," to fix it. The affected wallets -- known as "multisignature" wallets because they require multiple people to sign off before funds are moved, making them popular with companies -- were all created with Parity, a popular program for digital wallets. Parity multisignature wallets experienced a bug in July that allowed a hacker to steal $32 million in funds before the Ethereum community scrambled to band together to hack back and secure the rest of the vulnerable ether.

15 of 141 comments (clear)

  1. Reasons not to use cryptocurrency by Anonymous Coward · · Score: 5, Interesting

    1) It is extremely volatile
    2) Few businesses accept cryptocurrencies
    3) They are easy to steal
    4) They are not backed by real world goods, so the value can easily go to zero
    5) There is no anonymity because all transactions are public

    Anyone who cares about their privacy and security should avoid cryptocurrencies like the plague.

    1. Re:Reasons not to use cryptocurrency by bluefoxlucid · · Score: 2

      They are not backed by real world goods, so the value can easily go to zero

      Fiat currency is backed by productivity: there's so much of it and it's standardized, so it represents everything produced and sold in a time frame. Digital currency ... is hype. The strategy is literally "it becomes more-scarce as more is made, so it's worth more dollars because more people want it yet there's less of it!"

      --
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    2. Re:Reasons not to use cryptocurrency by Luthair · · Score: 3, Insightful

      Which sounds a lot like multi-level marketing.

    3. Re:Reasons not to use cryptocurrency by JaredOfEuropa · · Score: 5, Insightful

      Fiat currency is backed by productivity

      This is what cryptocurrency advocates forget when they state that fiat currency is as ephemeral as bitcoin. There's a caveat: you do need a responsible central bank to keep the money supply in line with the GDP, and a more or less stable economy. But that's why people favour dollars and euros over Nigerian nairas or Peruvian sols.

      --
      If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
    4. Re:Reasons not to use cryptocurrency by Anonymous Coward · · Score: 5, Insightful

      Just because something has a "cost" to make, doesn't mean the thing ends up with the same value.

      I can spend an hour of my time sticking rocks to the side of a cow pie, but that doesn't mean the end result is worth $8.

    5. Re:Reasons not to use cryptocurrency by WankerWeasel · · Score: 5, Interesting

      Bitcoin uses 215 kilowatt-hours (KWh) of power for each transaction. That could power the average American home for almost a week. It's incredibly wasteful. I believe recently they'd said bitcoin mining is currently using more power monthly than the entire country of Nigeria uses in a year.

    6. Re:Reasons not to use cryptocurrency by sl3xd · · Score: 5, Insightful

      And yet, Artist's Shit, sold for €275,000.

      --
      -- Sometimes you have to turn the lights off in order to see.
    7. Re:Reasons not to use cryptocurrency by Jeremi · · Score: 2

      The strategy is literally "it becomes more-scarce as more is made, so it's worth more dollars because more people want it yet there's less of it!"

      And oddly, this works. It's kind of like the "Limited Edition" collectors cars the Lamborghini (and similar) sometimes put out; they promise to only make 50 of them per year, and the people put down $2M for a car they'll (probably) never drive, because they're pretty confident they'll be able to sell it for significantly more than what they paid for it, soon enough. As long as demand continues to outstrip supply, the price will rise.

      Of course, this only works if (a) the manufacturer doesn't dilute the value of the product by increasing the supply too much, and (b) the perceived value of the product is sufficient that at least some people are willing to pay a higher price for it. Bitcoin guarantees (a) through an algorithm, which is nice; it's (b) that I would worry about if I was considering investing in Bitcoins (which I'm not).

      --


      I don't care if it's 90,000 hectares. That lake was not my doing.
    8. Re: Reasons not to use cryptocurrency by Khashishi · · Score: 3, Informative

      I don't think orthogonal means what you think. You need to consume energy to waste it.

      Also, heating your home with resistive heating is wasteful because heat pumps can be ~4 times more efficient (heating per energy consumed).

    9. Re:Reasons not to use cryptocurrency by WankerWeasel · · Score: 5, Interesting

      "This averages out to a shocking 215 kilowatt-hours (KWh) of juice used by miners for each Bitcoin transaction (there are currently about 300,000 transactions per day). Since the average American household consumes 901 KWh per month, each Bitcoin transfer represents enough energy to run a comfortable house, and everything in it, for nearly a week. On a larger scale, De Vries' index shows that bitcoin miners worldwide could be using enough electricity to at any given time to power about 2.26 million American homes." https://motherboard.vice.com/e...

    10. Re:Reasons not to use cryptocurrency by ChumpusRex2003 · · Score: 4, Informative

      The mean quantity of work required to "mine" a "block" of bitcoin transactions is given by the equation W = D * 2^32, where D is the "difficulty level" (currently 1.2e12), and W is the number of hash operations. In other words, one block requires on average 5e21 hash operations.

      The most efficient hash device available on the open market (and also used internally by the manufacturer for their own mining purposes) is the antminer S9 based on 16nm lithography ASICs. These have a specific energy consumption (this parameter is typically quoted as the main figure of merit for bitcoin mining systems, so is widely available for almost all mining hardware) of 60 pJ/hash.

      From these figures, we can calculate an energy requirement of on average 300 GJ per block - or about 83 MWh.

      A full block can contain approx 2000 transactions, giving a total energy consumption of approx 40 kWh per transaction at maximum transaction throughput (specific consumption is increased if transactions per block are reduced due to a low transaction rate).

      Note that the above energy consumption figures are based on the ASICs only, and do not include power supply/distribution/conversion losses, as well as miscellaneous control devices/servers/networking. Add in these losses, and you could be looking at 45-50 kWh per transaction.

  2. Monetary system or Ponzi scheme ? by ripvlan · · Score: 3, Insightful

    So far the early adopters seem to be trying to make a fast buck on the ever increasing value of the system - which grows because new people enter it. Is this real growth or a ponzi scheme?

    Wow - imagine if the banks could have an Undo button. Reset. Start over.

    National Debt could be erased, all those bad loans. Bankruptcy? What Bankruptcy?!

    I can't imagine losing $32 million in some money "system" --- could you imagine placing your paycheck into this "bank" to pay for all your stuff, and then the landlord says "last month's check never came through" only to find everything gone! $32, $320, $3200... or $32 million. Who cares how much evaporated - it's gone. Speculative investments at their best.

    It's an experiment that people are willing to invest $100's millions into? Feels more ponzi to me.

  3. Re:What you should take away from this by sl3xd · · Score: 2

    3. why does slashdot still require me to type br / to make a new line?

    There's a setting for that

    --
    -- Sometimes you have to turn the lights off in order to see.
  4. Utter, stark, raving madness by SlaveToTheGrind · · Score: 5, Insightful

    So now we had a wipeout from a bug fix for the last wipeout. This will, of course, be the last one... until the next one. Recovery from the prior debacle involved white-hat hackers taking it upon themselves to steal currency from vulnerable wallets (and eventually returning it) before black-hat hackers could. And this time around, apparently the only fix is basically to start an entirely new ecosystem and hope like hell everyone migrates.

    Contrast this miserable chaos to the sweet lilting tones from the founders:

    Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference .

    Caveat emptor indeed.

  5. Details - guess? by FeelGood314 · · Score: 2

    Smart contracts are actually a programming language. What is put into the block chain is actually code. For a transaction to be valid you run the program and check the output. Bitcoin is very restrictive about what programs are allowed to run. Etherium is less restrictive. The code for Etherium should have said to spend this coin a transaction requires some number of signatures from this list. It appears that devops199 was able to change that list to a list of only one signer. He then killed that signer. The transactions to do both those things are now buried in the block chain. To take them out a fork has to be made before devops199's transactions.

    Still trying to figure out if the bug was in the smart contract or in the "mining" code that allowed devops199's transactions into the block chain.