Sunday, August 25, 2019

Why Ethereum Fork Happened – Was DAO Hacked?

2009 saw the introduction and first practical implementation of a proper digital currency in the form of Bitcoin. It was the first of its kind. This form of currency relied on using cryptography to generate and verify the transactions of the formed currency. All the transactions get logged onto the ledger called the Blockchain network. Bitcoin turned out to be a revolutionary form of currency that was basically a decentralized peer-to-peer payment system that was not under the regulation of any central authority.
The rising popularity of Bitcoin and the innovative idea behind it led to the creation of more cryptocurrencies. Even though Bitcoin is still the biggest and most successful cryptocurrency, another entered onto the stage in the crypto-ecosystem: Ethereum.

Although quite similar to Bitcoin, Ethereum has some fundamental differences that render Bitcoin arguably archaic. Ethereum is not just a currency. It is a whole infrastructure that uses Ether as its currency and supports smart contracts, agreements written in computer code that come into play automatically upon completion of conditions.

Ethereum gained significant traction even though it was new on the scene, but its biggest turning point came with the experimentation of Distributed Autonomous Organization (DAO). A German blockchain start-up company came up with DAO with a radical goal of building an autonomous venture capital firm which would essentially allow all the investors to make decisions using only the facility of smart contracts. All the involvement that humans would have with DAO would be with the coding of the rules, but after that, the execution would lie completely within the realm of the pre-defined computer protocols.

Paramount success followed, with it having amassed roughly $150 million USD within a month of its launch on the 30th of April this year. This became the biggest singular crowdfunding effort in history and it became the most important achievement for Ethereum, the basis on which DAO was working on.
But with all good things, it had to come to an end. DAO was hacked on the 17th of June. In what can only be described as being reminiscent of watching a live video feed of a bank robbery, everyone was witnessing the real-time siphoning of the $150 million USD that was under the domain of DAO. By the end of this robbery in broad daylight, the hacker responsible was able to steal an amount of around $50 million USD in ether stating he was only taking advantage of some loophole that existed in the Distributed Autonomous Organization.

Related Article:  Unstoppable Domains Announces the Top 60 Zilliqa Domain Names Up for Auction

This put the core team of Ethereum in a moral dilemma. They didn’t have anything to do with DAO but they were left to deal with the problem. This would mean they would have to get involved as a central authority, the lack of which is the main basis of cryptocurrencies. They hacked the hacker and managed to recover the funds and place them into another smart contract. The problem was that with the way DAO was written, it was still possible for the hacker to make a claim on the funds he stole. With Buterin and Co. stepping in to fix the problem, heated debates sparked between those who think the funds should be returned and the purists who think that the power of smart contracts lies in their unchangeable nature. Henceforth the intervention was called the ‘fork’.

Initially the fork proposed was to allow all Ethereum users to vote and rollback the entire network to a previous day where DAO never existed and all the money would be reimbursed. Problems were found in the voting system which caused this proposal to fail and the core team resorted to using a ‘hard fork’ which was basically them revamping the whole Ethereum network with changed rules. Miners, investors, exchanges and other major apps built in the system would then decide if they want to stay on-board with Ethereum based on these new rules or stick with the older version.

Fears of the Ethereum price dropping were hanging over the heads of everyone invested into the blockchain network but things have worked out since then and the future of Ethereum looks more secure.

More Articles

Research: Bitcoin Adoption Grows In Emerging Market Organically

Bitcoin adoption in recent time has increased because of its speculative use. Many crypto investors are not into it for its use...

Jewelry Empire Birks Group Now Accepts Bitcoin Payment

Fine Jewelry and Luxury store, Birks Group, is now claiming their spot as the very first luxury retailer to accept bitcoin payment in Canada...

Paul Krugman Sees Cryptocurrency As A ”Useless” Commodity

Paul Krugman a 2008 Nobel prize winner of economics throws a challenge to the cryptocurrency community and the enthusiasts alike, to explain the problems...

The Congress Passes Bill To Monitor The Effect Of...

The U.S. Congress has passed a bill that enables the study of the role of cryptocurrency and online marketplaces in the promotion of sex...

Japanese Cryptocurrency Industry To Regulate Itself

The Japanese cryptocurrency industry has received the green light from the government to regulate themselves, after having to deal with two big hacks incidents...

Brian Kelly Says That Bitcoin Is Now A Serious...

Today, Brian Kelly, the founder, and CEO of the BKCM LLC, a company that centers in offering cryptocurrency related investment options, stated that this...

Texas Inspects 4 Crypto-Related Companies Due To Alleged Fraud

Since Texas formulated their 2018 Enforcement Report with the connection of crypto companies as fraudulent businesses, some companies went down as investigations arise in...

The Central Bank of Philippines Authorizes Two New Cryptocurrency...

The central bank of the Philippines, the Bangko Sentral ng Pilipinas (BSP), has sanctioned and approved applications filed by two new digital Currency exchanges;...

Developer To Get 3,000 XRPs For Integrating Ripple’s XRP...

A firm is offering a significant reward for any XRP developer that can develop a plugin that successfully integrates XRP and the WordPress' WooCommerce....

Venezuela’s New Crypto Legal Framework Now Effective

Venezuela's New crypto legal framework is now effective as published by a media outlet of the country, Gaceta Oficial. The legal framework enforced through...

Venezuela Announces Gold Backed Cryptocoin After Petro’s Success

The country ICO craze continues. The Government of Venezuela announced yesterday that it would issue yet another crypto-coin, on declarations made to the national press...

Crypto Twitter Demands for @Bitcoin Twitter Account Suspension, Twitter...

Crypto Twitter is still at it again but this time around, it's not the case of Craig Wright and Hodlonaut that is...

Latest Articles

Why Some Financial Bubbles Are Necessary Economic Disasters

Microsoft 70-411 Exam: Everything You Need to Know

We can’t deny the fact that the world is moving towards the future faster than ever before. Not a day goes by that we...

Why US-based people can’t bet with bitcoins at online...

Online gambling using bitcoin has been happening since the time when cryptocurrency came into being. In the initial days, gamblers used to opt for...

Couple Pays For Breakfast Using Bitcoin, Community Finds This...

A Reddit user by the username u/portageco recently made a post in bitcoin's official subreddit. In his post, u/portageco boasts about how he paid...

Australian Woman Leads Adoption, Tours 10 Countries Spending Cryptocurrencies

Who says you can't go around the world spending cryptocurrencies? As many believe, cryptocurrencies are only good for speculations. But with a little research,...

Did A Physical Bitcoin Just Sell For $99k On...

As at the time of reporting, the listing on eBay had closed. This could be because the seller got a buyer or he decided...

Litecoin Now Approved In 30,000+ Stores

As cryptocurrencies gain ground, more and more technology-based firms find ways to incorporate the nascent technology into everyday life. Moon, prior to this time,...

How To Shop on Amazon with Bitcoin – Step-By-Step...

Wondered how to shop on Amazon with bitcoin? Then here's how you can purchase goods on one of the largest e-commerce websites that ships...

How To Buy Bitcoin On Coinbase – Step-By-Step Guide

Buy Bitcoin on Coinbase instantly in the U.S., UK, Canada, or anywhere you are globally. Coinbase cryptocurrency exchange has enabled its customers buy the...

Grayscale Bitcoin Trust Boosts By 300%, Affects Oil &...

The institutional investment product, Grayscale Bitcoin Trust (GBTC), experienced a growth of more than 300% due to its outstanding performance since February, Forbes reports....

How To Create A Coinbase Account – Step-By-Step Guide

Create a Coinbase account with ease. Use this illustrative guide to create a Coinbase account for buying, selling, and storing cryptocurrencies. And you know...

$9.2 Trillion Transferred Using Bitcoins In 2.5 Years

Against present belief that bitcoin is only used for speculation, James McDowall, a crypto investor and advisor shared a metric about Bitcoin that's been...