from the you've-never-seen-1000-tonnes-of-gold-instantly-evaporate dept.
User mistakenly takes control of hundreds of wallets containing cryptocurrency Ether, destroying them in a panic while trying to give them back
Unlike most cryptocurrency hacks, however, the money wasn't deliberately taken: it was effectively destroyed by accident. The lost money was in the form of Ether, the tradable currency that fuels the Ethereum distributed app platform, and was kept in digital multi-signature wallets built by a developer called Parity. These wallets require more than one user to enter their key before funds can be transferred.
Source: https://www.theguardian.com/technology/2017/nov/08/cryptocurrency-300m-dollars-stolen-bug-ether
This is less than 1% of the entirety of the total value of Ethereum (as perceived by speculators). One must remember that the national debts of issuers of some fiat currencies could effectively destroy 100% of those currencies, so is it appropriate for dollar users (which indirectly is all of us) to sneer at cryptocurrency users for this apparent weakness which will, presumably, be fixed and never happen again?
Related Stories
Submitted via IRC for SoyCow1984
A crypto-currency collector who was locked out of his $1m Ethereum multi-signature wallet this week by a catastrophic bug in Parity's software has claimed the blunder was not an accident – it was "deliberate and fraudulent."
On Tuesday, Parity confessed all of its multi-signature Ethereum wallets – which each require multiple people to sign-off transactions – created since July 20 were "accidentally" frozen, quite possibly permanently locking folks out of their cyber-cash collections. The digital money stores contained an estimated $280m of Ethereum; 1 ETH coin is worth about $304 right now. The wallet developer blamed a single user who, apparently, inadvertently triggered a software flaw that brought the shutters down on roughly 70 crypto-purses worldwide.
[...] Cappasity has alleged the wallet freeze was no accident: someone deliberately triggered the mass lock down, we're told, and there's evidence to prove it. By studying devops199's attempts to extract and change ownership of ARToken's and Polkadot's smart contracts, it appears the user was maliciously poking around, eventually triggering the catastrophic bug in Parity's software. "Our internal investigation has demonstrated that the actions on the part of devops199 were deliberate," said Cappasity's founder Kosta Popov in a statement this week.
Source: https://www.theregister.co.uk/2017/11/10/parity_280m_ethereum_wallet_lockdown_hack/
Previously: $300m in Cryptocurrency Accidentally Lost Forever Due to Bug
Submitted via IRC for AndyTheAbsurd
I don't think it needs introduction about the current hype that is going on with Blockchain, bitcoin, Ethereum and other initiatives. To get more feeling about what it is and how it works I decided to have a go with Ethereum as it promises to be a possible disruptive solution for lots of different use cases. Without going into the theoretical background of Blockchain or Ethereum (there are already lots of docs written about it) this post will focus on how I set up a private Ethereum network on my MacBook. I will use Docker containers as Ethereum nodes and use Mist browser on my Mac to 'connect' to the private network.
Source: https://pragmaticintegrator.wordpress.com/2017/10/28/set-up-private-blockchain-with-ethereum-part-1/
(Score: 5, Insightful) by nitehawk214 on Thursday November 09 2017, @02:58PM (7 children)
Was that green-site style editorializing paragraph at the bottom necessary? Don't pretend that "since national currencies are fiat, they are no better than cryptocurrencies where a moron can wipe them out with a few keystrokes."
"Don't you ever miss the days when you used to be nostalgic?" -Loiosh
(Score: 4, Informative) by Anonymous Coward on Thursday November 09 2017, @03:11PM (3 children)
Green site editorializing would be anti-crypto. Their owner, BizX, runs a digital currency which is directly threatened by decentralized digital currency. They print half a dozen anti-crypto articles a day. This one is at the top of their feed.
https://news.slashdot.org/story/17/11/09/1317254/the-bitcoin-bubble [slashdot.org]
(Score: 2) by FatPhil on Thursday November 09 2017, @03:33PM (1 child)
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @03:41PM
The editorializing leads me to believe you're more anti-fiat than pro-crypto, but you're still attracted to crypto as a result. If so, I fall into the same boat.
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @05:18PM
Partial corroboration of the parent post can be found at https://www.sdbj.com/news/2016/jan/28/slashdot-media-acquired-bizx-undisclosed-price/ [sdbj.com] and https://en.wikipedia.org/wiki/BizX [wikipedia.org].
(Score: 3, Interesting) by FatPhil on Thursday November 09 2017, @03:25PM (1 child)
Some people might think that 300M is a lot of Etherium, which it is to those who've lost it, but it isn't more than a tiny portion of the whole. Some people might not know that most fiat currency is created in equal quantities as debt of that currency (which then grows). Which bit of the paragraph do you consider to be misleading? Should I also have added a sentence that said "Of course, don't believe for one minute that Etherium, and other crypto-currencies are not in fact fiat currency themselves", for balance? ( https://www.economist.com/blogs/freeexchange/2017/09/not-so-novel )
Strangely - or not so strangely, as you don't address the economics of the story - you didn't seem to note the largest bit of bias I included in the submission. Happy head-scratching...
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by legont on Friday November 10 2017, @03:55PM
I would argue that ether is not a fiat currency. The reason is, as far as I understand, ether is the only way to make ethereum Turing machine run. To run this computer one needs electricity and ether (and one can be conveniently converted to another so just ether). From this point of view ether is just your old plain boring commodity as any real money is supposed to be. Money, by definition, is a commodity used for exchange. Ether is (real, classical, nonfiat, same as gold) money, dollar or even bitcoin is not.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2) by FatPhil on Thursday November 09 2017, @03:40PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @03:03PM
Thank God those weren't Whoopercoins
(Score: 2, Insightful) by Anonymous Coward on Thursday November 09 2017, @03:04PM
... just stay away from it. It isn't the first time it has been the source of f*ck ups.
(Score: 5, Insightful) by bradley13 on Thursday November 09 2017, @03:22PM (10 children)
I expect they'll fix this with another hard-fork, the same as they did when the DAO was hacked.
The "smart contracts" are a clever idea, but Ethereum has prominently screwed up too many times - clearly it just is not ready for prime time. It makes for a great test-bed for the idea, buy what people still believe in Ethereum enough to put real money into it? That's a mystery. But this latest screw-up hasn't affected the ETH value at all, and that's just weird.
Everyone is somebody else's weirdo.
(Score: 4, Informative) by Anonymous Coward on Thursday November 09 2017, @03:36PM (4 children)
Because (currently) this isn't a failure of the Ethereum platform, any more than the existence of ransomware is a failure of C++. A smart contract was developed with poor oversight and quality control, a bunch of overzealous investors didn't do their due diligence and lost their money as a result.
As long as the Ethereum Foundation stays out of it, everything is working how it's supposed to and hopefully next time people will think twice before trusting their money to a shiny new overly-complex contract they don't understand. Or the EF will bail them out like the DAO, proving that companies run by co-founders of the EF and friends of Vitalik are held to a different standard than the rest and the Ethereum blockchain is nothing but an inefficient Access DB Vitalik controls with his Twitter account and cult of personality.
(Score: 2) by Bot on Thursday November 09 2017, @05:39PM
You are telling me investors put money in contract they did not understand? that sounds like finance and, like finance, will result in much money lost, indeed.
Account abandoned.
(Score: 4, Insightful) by Anonymous Coward on Thursday November 09 2017, @05:50PM (2 children)
No matter what stupid stuff you do, nobody should ever be able to take over someone else's money or contract without having the private keys. That's the whole point of having a digital currency. So it indeed is a design problem of Ethereum that it did not prevent this.
Note that the comparison to C++ doesn't fit, as C++ is by design a general-purpose programming language, so if you could not write ransomware in it, it would mean a failure of C++. OTOH the Ethereum language is (or at least should be) by design a language for smart contracts. As such it should be designed from the ground up to enable provable contract security. In particular, I think it is an extremely bad idea to make it Turing complete.
(Score: 2) by coolgopher on Friday November 10 2017, @01:55AM (1 child)
Are you sure about that? My reading is that it was a flaw in a smart contract, not in the Ethereum platform which executed said contract. Anyone who can pay the gas cost can deploy/run a smart contract onto Ethereum. Any bugs in it are then locked in forever more, unless you explicitly provide ways to supersede the smart contract with a newer version (which pretty much defeats the purpose of using an immutable platform in the first place).
(Score: 2) by Immerman on Friday November 10 2017, @02:04PM
I don't know, seems like it could be a handy ability in some special situations if you could also restrict the ability to change it - say if you need all, or a majority, or whatever of the stakeholders to approve any changes.
(Score: 2, Interesting) by khallow on Thursday November 09 2017, @04:09PM (4 children)
That's typical market bubble phenomena. For example, I watched The Big Short [wikipedia.org] last night where such things were a prominent plot point. The overall plot follows several groups of Wall Street investors in the time span of 2005-2008, leading up to the real estate crisis and parts of its aftermath. They all bet huge amounts on various securities that would pay out, if quality of real estate bonds (the fundamental unit was securitized bundles of mortgages mostly with a lot of speculative instruments layered on top) went down. This was all based on various observations that these real estate bonds had crazy out-of-whack estimates of the quality of the real estate mortgages that made up the bonds.
By January, 2007, every one of the groups was experiencing a great deal of doubt (and calls from bosses, investors, creditors, etc) because the markets were not declining in value as one would expect in the face of adverse news (here, it was a large increase in mortgage defaults). So they all asked themselves two questions. What are we missing? And should we bail out of our positions? The resulting search for answers in Las Vegas provides an entertaining climax to the movie (*spoiler* they weren't wrong).
Bottom line though was that the markets could remain delusional for a considerable length of time because a lot of relevant parties, including regulators and bond raters, choose not to look. I believe we will see that something similar has happened with cryptocurrencies. A lack of reaction to bad news is IMHO an indication that the market is ignoring adverse risk, a long tradition of bubble behavior.
To summarize, unfortunately, that is not weird, but expected behavior of a market in a bubble. If you're in that market for investment purposes, it's time to bail. The market may continue to go up, because there are a variety of ways and reasons for it to stay propped up and even bubble some more. But my take is that when Ethereum does collapse, it'll be to below present, perhaps orders of magnitude below present.
(Score: 2, Disagree) by Anonymous Coward on Thursday November 09 2017, @04:18PM (3 children)
The Big Short is government propaganda that places all the blame of the subprime mortgage crisis on Wall Street and completely glosses over the perverse incentives the US government created in mortgage lending via the Community Reinvestment Act.
(Score: 3, Interesting) by khallow on Thursday November 09 2017, @04:44PM (2 children)
You mean like the two Miami real estate dealers who sold mortgages to some of the very people that the Community Reinvestment Act targeted (here, immigrants and people with terrible or non-existent credit) and bragged about the shit borrowers they were able to cram into mortgage securities without affecting the bond rating? The Act wasn't mentioned by name, but it wasn't glossed over. Sure, the Act made things worse, but the real estate crisis would have happened anyway.
As to being government "propaganda", we have the amoral SEC agent who only shows up in the movie because they're job/husband hunting at the Las Vegas conference (with zero knowledge or care about the real estate market when questioned about it), repeated sarcastic mentions of former Fed chairman, Alan Greenspan (culminating in a scene where Alan Greenspan is about to speak while the audience is heading to the exits to trade on Bear Stearns [wikipedia.org] which stock has just collapsed), and mention of the TARP bailout at the end of the film. That indeed shows government in a fine light!
(Score: 2) by DeathMonkey on Thursday November 09 2017, @06:57PM (1 child)
You mean like the two Miami real estate dealers who sold mortgages to some of the very people that the Community Reinvestment Act targeted (here, immigrants and people with terrible or non-existent credit) and bragged about the shit borrowers they were able to cram into mortgage securities without affecting the bond rating?
Yeah, the perverse incentive is the bond ratings agencies being paid by the same people who sell the bonds.
(Score: 1) by khallow on Thursday November 09 2017, @09:23PM
FTFY. I wouldn't speak of it as unique. There was quite the rat's nest of perverse incentives at play in this crisis.
(Score: -1, Redundant) by Anonymous Coward on Thursday November 09 2017, @03:30PM (2 children)
nothing of Value was lost.
(Score: 2) by FatPhil on Thursday November 09 2017, @03:37PM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 2) by bob_super on Thursday November 09 2017, @05:52PM
Lots of kWh used to mine those coins, and lots of discounts on video cards which didn't happen
(Score: 3, Insightful) by Justin Case on Thursday November 09 2017, @03:45PM (7 children)
The problem with software-based money (including the stuff in your bank) is that many decades into the digital revolution, software reliability is still an unsolved problem.
The crypto may be mathematically rock-solid but everyone is thoughtlessly installing software when they have no idea how it works, whether it's any good, or how to determine either of those things.
Until that changes (and it won't) software can't be trusted for anything more than entertainment. Surely not money. Or controlling deadly machines (self driving cars for example).
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @03:50PM (5 children)
Humans are hardware. They run unreliable software on their brains. They can't be trusted not to sell drugs or shoot up the pastor's daughter.
(Score: 5, Insightful) by Justin Case on Thursday November 09 2017, @04:31PM (4 children)
So because humans aren't perfect we should trust machines?
That makes about as much sense as "because $YOUR_POLITICIAN is bad you should vote for $MY_POLITICIAN".
The difference is: a crazy human can hurt 100 people. A crazy web site can hurt 140 million people (Equifux). You can incentivize most human behavior with rewards or threats of punishment, except for those so insane as to be suicidal. How do you threaten or punish a machine? Or those who made it? So far it looks like Equifux will be apologizing all the way to the bank, and the executive stockholders will be crying into the sea under their yachts.
That's what you get for trusting machines with important stuff, like money or lives. But carry on, nothing to see here...
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @05:59PM
That depends. How many people did Stalin hurt?
Again, it depends. For example, no matter how crazy it might get in the future, SoylentNews will likely not harm very many people very much.
And I'm pretty sure that Equifux did a lot less harm than Stalin.
(Score: 2) by takyon on Thursday November 09 2017, @11:14PM (2 children)
Machines are becoming more like humans. If they are not showing real intelligence, they are at least being made to imitate patterns of human behavior and thought. Soon there will be no reason to trust either group more than the other.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 0) by Anonymous Coward on Thursday November 16 2017, @10:51AM (1 child)
Hmm. Maybe this statement was made by a machine or was made by someone that lacks any aspect of things like compassion which is present in any number of lower animals like dogs, pigs and even chickens but clearly lacking in here. Compassion (ie. empathy) is the cornerstone of our civilization, without which we are truly unable to have a society. Why? Because "fuck you, got mine" is not how most people function. And people that function like that tend to be over-represented in jail or wall street, depending how disciplined or lucky they are.
Yes, intelligence is important, but it gets us fuck all on the relationship level.
(Score: 2) by takyon on Thursday November 16 2017, @11:10AM
Mmmh, the compassionate scent of an easy mark. Machine-human criminal cooperatives gonna screw you over.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 4, Informative) by Lester on Thursday November 09 2017, @06:03PM
Yes, software reliability is still an unsolved problem. Nevertheless, there is high integrity software methodologies for avionics, nuclear plants, NASA, ESA etc.
https://www.nist.gov/publications/high-integrity-software-standards-and-guidelines [nist.gov]
Nothing guarantees 100% safety (Pathfinder, Ariadna 5...). But they have a ratio of errors very very low. Unfortunately high integrity software methodologies are cost a lot in time, many tests, many documentation, ultra tested compilers and platforms, tools for verification etc. Without reaching such level, banks, VISA etc, have a lot of security audits and exhaustive software verification.
Obviously, that is not what Ethereum and other "Let's change the world" guys are doing.
(Score: 2, Insightful) by insanumingenium on Thursday November 09 2017, @04:17PM (1 child)
How does anyone think comparing "losing" money of any stripe with national debt makes the first bit of sense? Are we trying to wipe out debt with crypto currencies now, is that the idea I missed? National debt isn't a bug, it is a feature.
(Score: 2, Funny) by WillR on Thursday November 09 2017, @08:03PM
(Score: 5, Insightful) by Thexalon on Thursday November 09 2017, @05:01PM (7 children)
The basic problem with them is that there's no regulation of them. And that's the goal of the people who've created them: Avoid all government regulation. Well, congrats, you're doing that, and as a result there are all the problems that have occurred back when commerce and banking was largely unregulated (e.g. "Your bank just went bust and you lost everything you put in there! Have fun!").
People act like government regulation is always bad, but sometimes government regulation saves everyone's butts or at least their wallets.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 3, Insightful) by Justin Case on Thursday November 09 2017, @05:25PM (6 children)
That's what's great about having choices. If you think government can do better, choose government regulated stuff. If you think government is bad, choose unregulated stuff.
The problems arise when everyone is forced into the One True Path and then asshats start setting up toll bridges on that path.
(Score: 3, Interesting) by Thexalon on Thursday November 09 2017, @06:03PM (4 children)
If you don't want to pay taxes (which is what you are referring to with the "toll bridges on the One True Path" metaphor), you're welcome to try living someplace where government either doesn't exist, or is totally unable to control the territory you're living in. There are quite a few places to choose from: Somalia, northern Afghanistan, the Amazon rainforest, northern Canadian forests or islands, uninhabited Pacific islands, or of course international waters. Some of those places are claimed by a government, but if you go off on your own and don't let slip where you're going or do anything to call attention to yourself, you can probably hide out on your own for quite some time.
I mean, maybe you'll be happy with your new life, but I wouldn't be surprised if you returned to government-controlled territory with a new-found appreciation for what governments do for you.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 2) by Justin Case on Thursday November 09 2017, @06:30PM (2 children)
Actually I was referring to a lot of other things besides taxes.
Like health insurance, which government made mandatory, and which (for me) will see an 18% increase next year, to over $1000 a month even though they rarely pay a dime, along with bigger copays for me and less choice of doctors.
"But Trump, and Congress, and the rich, and industry lobbyists...!"
Yeah, that's my point.
And I give you credit for expanding the "Somalia anarchy" argument just a bit. (Why is it always Somalia?) Something beyond copy-paste thinking. Good for you.
(Score: 3, Insightful) by Thexalon on Thursday November 09 2017, @10:44PM
If you're out in the middle of nowhere without a functioning government that even knows you're there, I'm fairly certain you don't have to worry about paying for health insurance and medical copays. Because you won't be getting a doctor anywhere near you anytime soon.
As for the ACA, the only thing worse than the ACA in recent years was what was going on before the ACA: The consistent pattern was that you'd pay in premiums when you were healthy with faith that this would turn into payments from the insurance company when you got sick, then the moment you got sick the insurance company would find excuses to not pay and cancel your policy as quickly as possible. And then you'd be stuck without insurance at all, because no insurer would ever allow you to get a policy without first proving you were healthy. Now there are at least some cases where illness doesn't immediately mean you're financially ruined.
"Think of how stupid the average person is. Then realize half of 'em are stupider than that." - George Carlin
(Score: 0) by Anonymous Coward on Friday November 17 2017, @09:47AM
I live in Germany. I pay 15% of my salary for medical insurance. Last year I used 0% of that since I didn't visit any doctor. And I gladly pay that so others benefited last year from my payments because in the future, if I'm sick, I know that I may benefit from other people's payments into the system too.
And that is what is really fucked up in America - people's inability to comprehend that healthcare is always needed, sooner or later, by everyone. The perception that you can only pay for health coverage if you need it, or that some do not deserve to get help because they are poor, it's really really fucked up. They think "it will not happen to me" and then just read all the stories about people that lose everything, their homes, even their families, because of medical issues that they never thought would occur to them. Example after example. Just like the entire gun debate - completely irrational. And completely "made in America" problem.
(Score: 1, Interesting) by Anonymous Coward on Thursday November 09 2017, @07:19PM
That kind of defeats the point, doesn't it? And what if you want an anarchist community? That might be difficult to hide. You say that such people should just go live in the wilderness if they want their freedom, but then admit that there are essentially no actual locations they can go to where they won't be oppressed by thuggish governments at some point. What options do they even have?
(Score: 4, Insightful) by bob_super on Thursday November 09 2017, @06:09PM
The correct way to proceed is to first build the tolls, then pay the right people to undermine the other paths.
(Score: 3, Informative) by cosurgi on Thursday November 09 2017, @05:08PM
Just check this:
https://github.com/ethereum/EIPs/issues/156 [github.com]
Vitalik saw that some people might make a mistake when programming their contracts and made a proposal to fix it.
#
#\ @ ? [adom.de] Colonize Mars [kozicki.pl]
#
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @05:22PM (2 children)
Three hundred millidollars is thirty cents.
(Score: 3, Funny) by Bot on Thursday November 09 2017, @05:34PM (1 child)
But, that should be written as 300 m$, which I agree should not be valued above 30 cents.
$ 300m is 300 meters of dollars, which, depending on the way the banknotes are aligned and their denomination, could mean a sizable amount of them.
Account abandoned.
(Score: 0) by Anonymous Coward on Thursday November 09 2017, @06:51PM
We're not talking fake metric prefix bullshit here. The mill is a real unit of currency.
300₥ = 30¢
(Score: 4, Insightful) by ilsa on Thursday November 09 2017, @11:26PM (1 child)
I can't believe not just the idiocy but the audacity of the person that wrote that drivel.
That's cold comfort to all the people that just collectively lost THREE HUNDRED MILLION DOLLARS with no way of recovering it short of getting 51% of all etherium users to agree to effectively do a 'git revert'. This sort of situation should not have been able to happen. It's inexcusable, and it's damn well frightening.
I don't know what the build process is behind Etherium, but clearly someone hasn't figured out dealing with finance requires more rigor than a social media stream filled with cat videos. And I doubt this will be the last catastrophe to happen either as long as people think that it's acceptable to throw away responsible development practices for an hacker/newer-is-better/anything-older-than-6-months-is-obsolete-mentality.
(Score: 1, Offtopic) by FatPhil on Friday November 10 2017, @09:37AM
Great minds discuss ideas; average minds discuss events; small minds discuss people; the smallest discuss themselves
(Score: 3, Insightful) by All Your Lawn Are Belong To Us on Thursday November 09 2017, @11:56PM
So, does "devops199" or "Parity" have the ability to make this right by determining and returning those people their $300m? Are they even known individuals who can be sued? Were they required to have those kinds of funds available to them to repair damage or take out insurance before contributing to the platform code?
Yeah, I think there's where traditional banking can sneer at cryptocurrency. It's a toy game because there's too many ways that the game can actually be destroyed, unlike hypotheticals of national debt wiping out a fiat currency.
But as to those who lost their shirts.... you decided to play around in a Laissez Faire Libertarian wonderland. So it's their fault they got screwed out of whatever money they're speculating with.
This sig for rent.
(Score: 0) by Anonymous Coward on Friday November 10 2017, @12:08AM (3 children)
Where did it go?
(Score: 4, Funny) by Justin Case on Friday November 10 2017, @12:41AM (2 children)
Governments poof money into existence.
Cryptocurrencies poof money out of existence.
It's a circle of life thing.
(Score: 1, Interesting) by Anonymous Coward on Friday November 10 2017, @05:42AM (1 child)
Didn't India just poof a bunch of money out of existence, too?
(Score: 0) by Anonymous Coward on Friday November 10 2017, @08:27AM
It was people buddy and into existence.