Ethereum’s DAO Forking Crisis: The Bitcoin Perspective

Ethereum is in a state of crisis. ‘The DAO’ (Decentralized Autonomous Organization), a code-based and leaderless investment vehicle that crowd-funded a record-breaking 150 million USD worth of ether, was unexpectedly drowned by an unknown hacker two weeks ago. About a third of all invested ether – some 4 percent of the total ether supply – is now sitting in a so-called ‘Child DAO’, waiting until it can be withdrawn in another two weeks from now.
This presents the Ethereum community with a tough choice and three* main options. First, the community can decide to ‘do nothing’ and allow the hacker to withdraw his funds. Second, the community can deploy a soft fork to freeze any funds associated with The DAO, ensuring the attacker cannot withdraw any of it*. And third, the community can deploy a hard fork to essentially ‘roll back’ the entire existence of The DAO on a protocol-level, take back the lost funds and give it all back to the original investors.
The DAO in no way affects Bitcoin, and the choice is fundamentally to be made by the Ethereum community. But the hack and chosen solution may draw a stark and telling contrast with Bitcoin, and the Bitcoin community. Bitcoin Magazine therefore reached out to prominent bitcoiners and asked:
‘What should the Ethereum community do, and is this any different from what the Bitcoin community should do were a similar situation to arise?’
*A newly discovered vulnerability suggests that soft forking may not be an option after all, and the only choice left is that between doing nothing and hard forking. At the time of writing of this article, not all respondends where aware of this development.

This post was published at Bitcoin Magazine on Jul 01, 2016.

Leave a Reply

Your email address will not be published. Required fields are marked *

Reload Image