Well lads and lasses, I know that cryptoland is a risky and dangerous place, fraught with dangers for your funds but this year has been pretty crazy for Ethereum so far. We have hard fork after hard fork on the BTC network and each time, the risks seems to be getting higher and higher. Now we have yet another vulnerability in the Parity Multisig wallet which has now accidentally been triggered and the resulting fallout is that hundreds of wallets holding around $150M ETH have been made to self-destruct.
The net effect is that these ETHs are now locked up in effectively dead contracts while ETH developers try to figure out a way to reverse the damage from what is supposedly a coding accident by a ETH newbie - that's one major blooper to make!
A troubled history
This isn't the first time that white hat hackers/devs have had to ride to the rescue when major trouble struck. We of course had the original DAO hack back in the summer of 2016 which remains one of the biggest hacks ever in terms of value stolen, the damage was mostly reversed by literally turning back the clock on the Ethereum blockchain with a hard fork. Doing hard forks like this is not the way decentralized blockchains are supposed to work. Purists in the Ethereum camp disagreed with this move, their philosophy is that the code is the law, even with imperfections. What we ended up with was Ethereum (ETH) and Ethereum Classic (ETC).
Then, earlier in July this year, in the midst of the white hot ICO fever, we had some attackers steal around $30M worth of Ether from Parity Multi-sig wallets using an exploit in the wallet. Most of these wallets were used by various companies who were running or had recent ICOs. These included Edgeless Casino, Swarm City, Aeternity, and many others too. Fortunately, the vulnerability only affected multisig wallets and not standard wallets. Perversely, multisig wallets are supposed to be more secure requiring multiple keys to sign transactions, this solves the problem of a single rogue employee running off with funds, but instead it turned out to be less secure in this case due to the vulnerability which was discovered and subsequently exploited to devastating effect.
White hat hackers once again rode to the rescue, this time they engaged in a race against the hackers by using the same vulnerability to hack into vulnerable wallets and moving the funds off to a safe wallet so that it can be returned later when the storm has passed.
Now for the latest major issue to strike Parity multisig Wallet users, another vulnerability in the software was triggered by somebody causing a number of wallets to run the suicide code which wiped out the code in the contract making it useless in the process. Given the nature of this situation, it is starting to look likely that the only way to remediate this "accident" is to perform a blockchain hard fork to restore the chain to pre-accident state. This is far from ideal and does not do much for the image of Ethereum which seems to be dogged by controversy since the early days.
Need more details?
If you want to read a more detailed explanation of this issue, check out this excellent blog.
Time for something else?
I have a funny feeling that this isn't going to be the last time we'll see something like this happen again. Each time something like this happens, confidence in Ethereum is going to be dented even though it's not actually an Ethereum problem per se.
And Ethereum is not the only smart contract solution available and there's plenty of others who are more than willing to give it a go if people would give them a chance. This list of alternatives is long and growing too, some of these are ready to go now and some will be ready soon:
The coming days will be interesting indeed as we wait to see what actions will be taken to address this problem. I have a sneaking feeling that a hard fork is coming... it's not like we are not used to hard forks nowadays?!?!? :-)
Thanks for reading
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