Cryptocurrency and the blockchain technology is virtually unhackable. A decentralised coin with large hash power has proven itself time after time to be more effort than it's worth to try to hack.
As with all good hackers though, the weaknesses aren't found at the castle's front gate. A good hacker will find small nooks and crannies, which they can crawl through and exploit to their gain.
And that's exactly what happened last year on the Ethereum platform... The DAO attack.
In May of last year, a project based on the Ethereum platform held a one month long crowd funding phase... They raised $150 million worth of Ether (12.7 million ETH at the time), which made it it the highest funded crowdfunding project of all time.
The DAO (Decentralized Autonomous Organization) was set to be a decentralized venture capital fund, where the owners of the DAO tokens could vote on various investment proposals and would obviously receive a percentage of any profits.
A great idea with smart marketing - a sure success.
Their success was shortly lived, though.
A hacker managed to find a bug in the code which allowed him/her to perform what is known as a “recursive call” attack which was used to drain some of the smart contract accounts...
The result?
The hacker managed to drain $70 million worth of ETH from The DAO to an offshoot account!
Of course the beauty of it is that when something is done on the blockchain, it's done!
There was a lot of debate as to what to do. A soft fork was attempted but failed and the final result was that Ethereum hard forked... Ethereum Classic left unchanged, whereas Ethereum decided to wind back the hands of time and refunded the accounts that had their funds drained.
The hack that created its own coin - Ethereum!
