While the rest of the top 10 cryptocurrencies enjoyed a warm Wednesday morning, Ethereum was stuck out in the cold.
In fact, today’s Ethereum news is probably the worst news since its historically bad fork last summer. Here’s what happened…
A random developer discovered that popular ETH wallets from Parity Technologies have a gap in their coding. That gap creates a security risk that hackers could exploit to steal ETH tokens. It’s like leaving the vault door in a bank slightly ajar.
Luckily, the money was not stolen.
However, something almost as bad happened. The random developer who discovered the gap “accidentally” froze up to $150.0 million’s worth of Ethereum. That money is essentially lost in the blockchain, unless…
…Ethereum goes through another hard fork.
This is a controversial act because it involves restoring the network to exactly what it looked like before the hack, then fixing the software bug before it becomes a problem. To a normal person, this sounds like the obvious course of action. Duh, of course we should get the money back.
But to blockchain experts, this process looks a little shady. After all, the whole point of blockchain technology is that you cannot change the record. If you’re able to reset the network and tweak it, doesn’t that call into question the integrity of the distributed ledger?
It’s a catch-22 of sorts.
I feel it’s important to note that the security risk wasn’t in Ethereum’s code, but rather that of its client: Parity. It was Parity’s smart contract that caused this $150.0-million blunder, just as it was Parity’s software that led to a $30.0-million hack this past summer.
But will investors respect the difference?
Daily Ethereum Chart
Ethereum has survived this kind of crisis before, but its price had to fall dramatically. I want to be clear: This is a serious threat. We are actively monitoring the situation, waiting to see if a resolution is reached to restore customer funds. If not, we may have to revisit our Ethereum price forecast for 2018.