The value of the digital currency Ether has crashed by more than a quarter at the time of writing, following a heist which saw as much as 10 percent of the entire world total of the cryptocurrency spirited away. The theft even had a knock-on effect with Bitcoin, taking that more famous cryptocurrency down a few percent points — though Bitcoin may have already begun to recover.
For the uninitiated, Ether is a digital currency much like Bitcoin, which utilizes programmable transaction functionality to make it more user-friendly and secure. At least in theory. Unfortunately for investors in the digital asset, the theft of almost $80 million dollars from a Decentralized Autonomous Organization (DAO) has left many wondering about the future of Ether and the Etherium platform.
The DAO could arguably be called the biggest crowd-funding project in history, having generated $150 million from thousands of investors. The idea was to use the fund to make investments based on the vote of the collective, ditching the classic fund manager middleman.
While that aspect of the DAO may have worked as intended, the fact that someone has stolen Ether currency valued at $79.6 million (as per QZ) of Ether has shaken a lot of people’s confidence in the platform. At the very least, it seems unlikely that such a fund will be created in the future.
Of course anyone who has followed Bitcoin’s history will know that there is always a risk involved in putting digital currencies in singular wallets. Part of the reason so many of the big dark-net drug marketplaces folded is because owners went rogue with the wallets that stored escrow funds between buyers and sellers.
Bitcoin exchange Mt. Gox also famously went belly up after several hundred million dollars in Bitcoins vanished from its coffers.
Moving forward, it seems unlikely that the DAO will survive in its current guise. The developers of Ethereum have been conducting damage control, pointing out that this was a fault with the DAO itself and not with Ethereum, which goes into more detail about how the theft took place on its official blog.
There is some suggestion that if “Ether miners” work together, they could effectively “roll back” the Ethereum blockchain to some point before the hack, thereby defeating the entire purpose of the theft. However there is concern that such a course of action would mark the start of groups of individuals controlling a currency whose value was intended to remain beyond the whims of individuals.