$31 Million In Tokens Stolen From Dollar-Pegged Cryptocurrency Tether

Mark Wilson shares a report from BetaNews: All eyes may be on the meteoric rise of Bitcoin at the moment, but it's far from being the only cryptocurrency on the block. Startup Tether issued a critical announcement after it was discovered that "malicious action by an external attacker" had led to the theft of nearly $31 million worth of tokens. Tether is a dollar-pegged cryptocurrency formerly known as Realcoin, and it says that $30,950,010 was stolen from a treasury wallet. The company says it is doing what it can to ensure exchanges do not process these tokens, including temporarily suspending its backend wallet service. Tether knows the address used by the attacker to make the theft, but is not aware of either who the attacker is, or how the attack took place. The company is releasing a new version of its Omni Core software client in what it says is "effectively a temporary hard fork to the Omni Layer."

Comments

SFYL

[Baron_Yam]

They have a script, you know. This has been played out over and over and over and it pretty much always ends the same way - with the criminals fading away and the 'investors' moving on to get fleeced by the next crypto scam.

Does not instill confidence

[sinij]

>>>but is not aware of either who the attacker is, or how the attack took place

This does not instill confidence.

Re:Does not instill confidence

[thereitis]

On the other hand, if my credit card gets stolen then it's insured against loss. I don't pay a nickel. How are crypto currencies ever going to provide a similar safeguard without centralization of some sort?

Re:Does not instill confidence

[Interfacer]

They're not. There's also absolutely no way to 'undo' transactions if someone makes a mistake. The only option that exists is to do a hard-fork, revert the entire blockchain to a point where one or more specific transactions have not happened. This has happened once, with the DAO hack and the Ethereum hard fork which was done to mitigate it.

This is obviously very risky because you risk destroying the project if the fork does not get universal support. The only reason it was a success for Ethereum was that the project at that point was still fairly small, and the amount involved was a single transaction and none of the coin had propagated to other places. These days it would be all but impossible to pull off the same support for a hard fork. People who were victims of the recent Parity fuck-up in which a million ETH tokens are frozen forever: they're SOL. I am fairly certain there's not going to be a hard fork.

So you are correct: from a consumer standpoint, crypto currency has several advantages, but also several downsides.

This is why not all cryptocurrencies are bitcoin

[shaitand]

Just because it is a cryptocurrency, doesn't make it proven like bitcoin is proven. All sorts of third party scams have been running using bitcoin from the fed raid of silk road to mt gox but the bitcoin system itself has proven solid despite being the tool and target of every hacker around the globe and no other cryptocurrency even comes close to having passed that pressure test. Your tether, ether, dodgecoin, pokemon-emo-coin whatevers might be digital currency with cool and snazzy sounding ideas but they are barely even on the radar yet and many of them have been riddled with serious flaws. Interest in them and their value could disappear overnight. It is reasonable safe to say that no matter what happens, bitcoin is unlikely to go anywhere soon even if it ends up eventually being used as a reserve currency for some next gen winner that handles microtransactions more efficiently bitcoin will still hold value.

Re: Who Runs bitcoin

[shaitand]

"Is bitcoin secure because those involved in the administration of it are honest?"

Bitcoin is secure because administration of it is completely decentralized so that nobody has to trust anyone. The entire thing is set up so that any point you are depending on the consensus of lots of random third parties who have no way to know what they are giving an opinion on, no way to influence what comes their way, and nothing to gain from the outcome. At every point it uses insane and impossibly large numbers rather than tricks or secrets and assumes everyone is greedy. How do you get lots of people to volunteer to verify transactions they can't cook for personal gain? Call it mining and give them the new chunks of bitcoin plus the transaction fees. Solid strategies with mathematical proofs, a total lack of trust, and no assumption but a general tendency toward self-interest. That is the bitcoin way.

The other thing it does is shift a lot of the burden of "security" onto the users. Bitcoin makes sure that you can trust the bitcoin I just gave you is real, I actually had it in my pocket, and that I can't somehow take it back afterward. It entirely shifts the burden to you to care or not care about whether I got it clubbing seals or helping old ladies cross the street and to me to make sure I'm not buying the Brooklyn bridge. I tend to agree with the makers of Bitcoin, it isn't that those things are important but they aren't the responsibility of the dollars in your wallet.

All of this has happened before.

[Kaenneth]

You want to give me shiny lumps of metal for my goats, are you insane?

You want to give me slips of paper backed by shiny lumps of metal for my goats, are you insane?

You want to give me slips of paper not backed by shiny lumps of metal for my goats, are you insane?

You want to give me data backed by paper not backed by shiny lumps of metal for my goats, are you insane?

You want to give me data not backed by paper not backed by shiny lumps of metal for my goats, are you insane? --- where we are now