R3 and The DAO Danger: How the Attack Can Impact the Blockchain Consortium

Сonsidering the rising reputation of the Blockchain as something truly secure, the impact of the DAO attack might be disastrous not only for The DAO and Ethereum themselves but for R3 consortium and its members too.

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R3 and The DAO Danger: How the Attack Can Impact the Blockchain Consortium

Сonsidering the rising reputation of the Blockchain as something truly secure, the impact of the DAO attack might be disastrous not only for The DAO and Ethereum themselves but for R3 consortium and its members too.

What if a smart contract fails

Getting back to business with the ‘hard fork’ would mean rolling all the transactions back to a point before the theft. Using a ‘soft fork’ instead would be equal to blocking all the transactions from the attacker’s address. Another option would be to do none of these and say,  “That’s how the system works.”

The option of doing nothing wasn’t really an option, of course, as DAO’s tokens’ holders might want to get their money back. Hard fork, as solid as it sounds, however, would be in a complete contradiction with the basic principles of the distributed self-governing ledger.

Patrick Murck, a lawyer and researcher at Harvard University’s Berkman Center says:

“The contract is the code, it's unstoppable code, it's unbreakable, it's self-executing and autonomous — right up until everything goes wrong. And then, 'No no no no, that's theft!' Which is some social norm that we've attached to it that's not based in the code, and then we're going to stop the whole system and basically bail it out. Is this something we're going to do every time a smart contract fails? Or is this just because there are a lot of [Ethereum] insiders in The DAO?"

In other words, if the vulnerability was in the code, it literally is part of a contract. And if a self-sufficient smart contract is backing out, what is so smart about it then?

Soft fork is something that Vitalik Buterin proposes:

“Miners and mining pools should resume allowing transactions as normal, wait for the soft fork code and stand ready to download and run it if they agree with this path forward for the Ethereum ecosystem. DAO token holders and Ethereum users should sit tight and remain calm. Exchanges should feel safe in resuming trading ETH.”

Vitalik Buterin

Actions taken so far

Alex van de Sande, the lead designer at the Ethereum Foundation, has given an update on Reddit of what’s happening – and that is White Hat Counter Attack.

Basically, because the attackers were continuing draining ethers from the DAO community, an independent group of the ‘good guys,’ so-called Robin Hoods, made a counter-attack and are now holding over 7 million ether on DAO’s own ‘child DAO,’ waiting to be rescued.

The rescue is happening via soft fork after all, as Fabian Vogelsteller, Lead Ðapp Developer at Ethereum says in his Tweet.

How did R3 Blockchain Consortium react to the DAO attack?

Todd Mc’Donald wrote on R3CEV’s blog post about ‘the DAO danger that it was like ‘watching a young hoops prospect going pro too early.’ And he has a point – collecting over 100 million dollars on a very young platform and assuming nobody will take a challenge trying to hack it would be unthinkable. As American Banker says, human involvement seems to be still necessary, as sexy as decentralized automated systems are these days.

Kathleen Breitman, Senior Strategy Associate at R3, also thinks it is time for the Blockchain community to wake up to thinking more thoroughly about both the security and the governance of distributed ledgers. According to Breitman:

“Despite pleas for a temporary moratorium on The DAO by computer scientists who spotted several deficiencies with it, The DAO management went forth with their platform and it was soon hacked.”

So, it looks like the R3 team tend to see the cause of the problems in the DAO management, not in the Blockchain. And the next thing that can probably happen is that the hack will become an example of how to avoid such problems in the future.

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