7 ms·

This probably sounds like an insanely dumb idea to crypto people, but is it absolutely infeasible to reverse transactions when there's consensus that it's a hac

by adtac 5y ago

This probably sounds like an insanely dumb idea to crypto people, but is it absolutely infeasible to reverse transactions when there's consensus that it's a hack? The TX fees need not be reversed (consider it to be a small price to pay for being hacked). A little bit of centralisation could make the whole network safer. Who is that centralised authority to decide what's a hack, I hear you ask. I don't know, but the authority could be elected and impeachable to make it more democratic.

RL_Quine 5y ago
What is your threshold? Who decided what is "not legitimate" activity? Clearly in this case the money was spent using the keys that were allocated to be able to control the money, what process overrides that?
- arcticbull 5y ago
  I mean we have an answer to that, it's called the law, and its worked since 1750BC. [edit] This guy, Hammurabi - king of the First Babylonian Dynasty - faced a similar quandary, so there's some prior art. Disputes under the law are resolved in court.
  - SketchySeaBeast 5y ago
    Isn't that anathema to the new world order the crypto people are espousing?
    - horsawlarway 5y ago
      Generally yes. As someone who has actually purchased real goods with bitcoin (silkroad) and has dealt with the blowback of the MtGox scandal (still receiving court details to this day...) Those crypto people are snake oil salesmen. Full fucking stop. They aren't interested in making anything usable, they're interested in wild speculation, gambling, and outright scams.
    - gonehome 5y ago
      There are lots of us that recognize the new capability crypto provides (improved self-custody over assets, currency scarcity not controlled by governments) while also not claiming a new world order. Like most things it's not all or nothing and there are pros and cons.
      - the_gastropod 5y ago
        Hitting yourself in the head with a hammer might offer some benefits: - The cool metal might cool your head on a hot summer day - Might knock yourself unconscious to avoid boredom (could be real handy during long flights!) But these nice features are inseparable from the fact that you're hitting yourself in the head with a hammer, which has many serious downsides, too. The "improved self-custody" crypto offers is one side of the ledger. The other side is: you lose regulatory protection, and can be swindled with virtually zero repercussions. Crypto's entire reason for existing is to circumvent government control—it's pretty "new world order" all the way to the core.
        gonehome 5y ago
        This is a comparison dumb enough to basically be in bad faith. Ignoring that and focusing on the substance: > "The "improved self-custody" crypto offers is one side of the ledger. The other side is: you lose regulatory protection, and can be swindled with virtually zero repercussions." Yeah I don't disagree with this - the risks are real. Some of this can improve with better tools, but some is just higher risk that exists with self-custody. You don't need to move 100% of your wealth into crypto (and I'd argue you shouldn't in nearly all cases). Crypto provides a new capability to take control in a way that other options don't or don't support as well. There is value in this capability even though it has associated risks. > "Crypto's entire reason for existing is to circumvent government control—it's pretty "new world order" all the way to the core." Not all governments are good and even good governments can implement bad policy. Self-custody is a lever against the kind of top down CCP like control of entire economies and a totally controlled cashless future. It's also a hedge against stupid actions from your government (like what we're seeing in Russia currently). New world order suggests replacing the entirety of the existing thing. I'm not suggesting that, I'm focusing on the fact that it offers a new/improved capability that gives individuals more power. I think this is a good thing, but good/bad subjectivity aside it's just a true feature of crypto. https://www.lesswrong.com/posts/PeSzc9JTBxhaYRp9b/policy-debates-should-not-appear-one-sided https://www.lesswrong.com/posts/PeSzc9JTBxhaYRp9b/policy-deb...
  - horsawlarway 5y ago
    No one in crypto typically wants to acknowledge this, but this is the clear and robust answer. Your keys your coins is obviously a situation rife for unreconcilable fraud, and is not a functional solution for anyone who might - ya know, want to spend these things as a currency.
    - xur17 5y ago
      I disagree. It's definitely a trade-off, and there are downsides to it (this security breach being a good example), but there are also advantages. With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc. With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$. Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.
      - horsawlarway 5y ago
        What savings? The savings associated with transactions fees (reasonable for very large spends - utterly ridiculous for small amounts, even today after the major drops, at more than 1.7 USD/tx)? The savings associated with double spend fraud that occurs if you don't delay the transaction for 3 to 6 blocks even though you say it's final (hint - that's not true, and waiting is a large downside for prompt processing at a point of sale) The savings associated with being literally dragged into court because it turns out that fraud is still a thing, and the legal system still matters, and despite you saying that the transaction has settled - the courts can and WILL disagree? I just don't see it. I see a very nice way to send money to folks who are working dark markets and understand escrow (which re-introduces the risk that your transaction isn't actually settled), and a really shitty transaction method for basically everything else.
        xur17 5y ago
  - zaroth 5y ago
    The only way to apply the court’s judgement (in the case of ETH) is to hark fork, because there is no governance contract in place. A blockchain can in theory support such things, which would allow a majority vote to approve the court’s judgement, but not ETH as it currently stands. Alternatively if you could get enough miners to just collectively agree to replay the blocks without that transaction you could let the owners move the funds, but it’s monumentally difficult as time goes on and the number of blocks to rewrite increases. If it was detected in seconds, an emergency protocol does exist between certain large mining pools for this sort of thing. Specifically, if you have contracts holding that kind of balance, if a transaction appears on the network which touches a percentage of the funds, you get blistering alarms ringing and someone can “break glass / pull lever” to lock the contract balance into an emergency cold vault. It freezes the DEX but better that then lose the funds. You partner with mining pools to pre-clear that TX and ensure your transaction gets priority in the next block, before the attacker’s transaction goes thru (making theirs the double-spend). But they weren’t even watching. They didn’t even know until the next DAY.
    - jacques_chester 5y ago
      > The only way to apply the court’s judgement (in the case of ETH) is to hark fork, because there is no governance contract in place. Courts can and do issue orders against any kind of asset in order to enforce justice and unlike smart contracts, their orders are backed by men and women with dogs and guns. Put another way: a court will not say "gee, gosh, if only ETH had a mechanism I could give orders for! I guess I'm beaten". They will instead say "you owe $X and I will seize all assets you have today, or will ever possess in future, in order to pay that debt". And when it turns out that people thought they were clever by evading the court order by keeping everything in a coin, they will then learn that ethereum can't buy top bunk at the federal penitentiary if you don't have access to a computer.
      - zaroth 5y ago
        We are talking about two different things. I’m talking about a decentralized algorithm which runs on your own machine and can reach a conclusion about a transaction being invalid even though it may have a valid signature. For example, imagine the thief just burns the ETH. $600mm notional value is destroyed in a few bytes of crypto. Whether someone goes to jail or not is besides the point. Can the funds be recovered, and what is the algorithmic mechanism to provide for that recovery?
  - the_gastropod 5y ago
    No no no. Crypto enthusiasts reject the idea of the law, and the tyrannical governments that enforce them. Code is Law! Therefore, this is perfectly legal. Conceding that this situation sounds absurd destroys the entire raison d'être of crypto.
    - koonsolo 5y ago
      Code is not law, consensus is law. Big difference! And it's not even law, it's consensus has value.
  - xur17 5y ago
    Disputes can still be resolved like that in crypto, it's just up to the legal system to track down the key holders to revert the transaction. Essentially - solve it at the legal layer, don't complicate the protocol.
  - noasaservice 5y ago
    Hammurabi's laws only work when they have a monopoly on violence to enforce said laws. Shitcoins (all of them) remove the potential of violence as a means of corrective action. Instead, you have crazy hard math stopping you. Can't do the math? Then you're not forcing your decision.
    - arcticbull 5y ago
      > Shitcoins (all of them) remove the potential of violence as a means of corrective action. Instead, you have crazy hard math stopping you. Can't do the math? Then you're not forcing your decision. Oh no they don't. You can still go to prison, and they can still smack you around. To pretend otherwise is to play emu.
    - acdha 5y ago
      Think about this a bit more: I steal your cryptocurrency. When the police show up at my door and I say “you’d have to solve an impossible math problem to get it back!” do they a) threaten beat me and/or my family (Russia, China, etc.), b) shoot my dog and put me in jail where they look the other way while other inmates beat me (U.S. version), or c) toss me in jail (best-case Scandinavian version) until I tell them the key? There isn’t any case where they say “math is hard, guess you get away with it!”
  - quantified 5y ago
    Courts and the legal system are centralized authority, not sure they are compatible with the crypto vision.
  - deleted 5y ago
    [deleted]
shakezula 5y ago
You’re describing a hard fork - exactly what created Ethereum and Ethereum Classic after the DAO hack. Even now it’s still considered a controversial move.
- gonehome 5y ago
  I think the majority sided with the move (which is why Ethereum soldiers on and EC is basically useless). It's a good final social check on bad behavior. I think Vitalik as written about this (I'm pretty sure I read about it in one of his long form posts).
  - ohgodplsno 5y ago
    >I think the majority sided with the move (which is why Ethereum soldiers on and EC is basically useless). Hahaha, no, the wealthy sided with the move. Of the 82,054,716 ETH in existence, only 4,542,416 voted, for a total voter turn out of 5.5% of the total supply on 16 July 2016; 3,964,516 ETH (87%) voted in favor, 1/4 of which came from a single address, and 577,899 ETH (13%) opposed the DAO fork. Vitalik and his friends stood to lose a lot of money, and being the biggest players in town with their premined shitcoin, voted against them losing money.
    - gonehome 5y ago
      The vote is only one part of it. What people continue to use and build on is the other.
  - trompetenaccoun 5y ago
    He's also written this, basically warning about something like the very situation now happening 2 months ago: reddit.com/r/ethereum/comments/rwojtk/ama_we_are_the_efs_research_team_pt_7_07_january/hrngyk8 The DAO "hack" was a bit different from this, around 14% of all Ether were in that contract. There isn't going to be another rollback, especially not for something like the here discussed attack. Trusting third parties is risky. It's like taking your money out of your bank account and sending it to a bank in Nigeria. Things can go wrong, the chain can't be rolled back every time someone loses money. People have to be more careful.
TheDudeMan 5y ago
Or maybe don't lend a valuable asset to a game studio.
dheera 5y ago
Maybe someone could invent the "FDIC" of crypto in smart contract form where everyone pays a periodic premium but if a hack occurs and there is consensus they get a payout. Only problem is everyone would have to use their own wallets for it to work, and for most people it's safer to store large amounts of crypto on an exchange instead of a wallet for personal security reasons.
- itintheory 5y ago
  > and for most people it's safer to store large amounts of crypto on an exchange instead of a wallet for personal security reasons. This is the opposite of what is usually recommended.
  - dheera 5y ago
    Yep, I realize that, but having your own wallet means: - Everyone can track your transactions and personal wealth on EtherScan or similar tools, whereas in an exchange it is significantly obfuscated by the exchange's own collection of wallets and databases. - You could be robbed at gunpoint for your hardware wallet. - You could lose your wallet in a fire or other natural disaster. - While you can back up your wallet keys online, most people cannot remember the long passphrases, and end up writing them down on paper which isn't secure if someone were to break into your residence or office. For most users the combination of these risks far exceed the risks of keeping money in an exchange. But yeah, if you're a billionaire with a 24/7 personal security team and personal firefighter team, then yeah, by all means, keep your own wallets.
- xur17 5y ago
  > Maybe someone could invent the "FDIC" of crypto in smart contract form where everyone pays a periodic premium but if a hack occurs and there is consensus they get a payout. Nexus Mutual, and a few other on chain insurance protocols offer exactly this. You pay them some premium, and they pay out in case of losses due to hacks, smart contract vulnerabilities, etc. So far they've worked fairly well, and paid out in hacks like this that occurred.
woodruffw 5y ago
I'm not a cryptocurrency person, but my understanding is that that's happened before: ETH effectively rolled back the DAO hack[1] in 2016. The end result was the "Ethereum Classic" split, which continues to this day. There are all kinds of financial ramifications to this kind of split, nearly all of which (to the best of my knowledge) remain unsolved. The problem that you've correctly observed gets to the very root of why cryptocurrencies are a farce: if participants need the confidence of an ultimate human democratic process, you might as well kick the immutable public ledger to the curb, skip the tire burning, and use the financial system we already have. [1]: https://en.wikipedia.org/wiki/The_DAO_(organization) https://en.wikipedia.org/wiki/The_DAO_(organization)
- misiti3780 5y ago
  they hard-forked the DOA, the old fork is still traded as ETH Classic no?
  - woodruffw 5y ago
    Yes, Ethereum Classic is still traded (although I have no idea how thinly). That's exactly why it's a problem: every account pre-fork now exists on two blockchains, and it's not clear what the tax, contractual, legal, etc. ramifications are of essentially doubling everybody's money. The nature of the blockchain also means that forks are destructive against innocent transactions: users doing "business as normal" who have the misfortune of being included in or after the rollback block have to re-coordinate all of their work.
deweller 5y ago
It was the centralized nature of this bridge (5 private keys required) that allowed this hack to happen in the first place.
paxys 5y ago
Well you can do anything with the ledger if there's consensus. That's how the entire thing works. How are you going to convince >50% of the mining pool to agree though?
qq66 5y ago
Keep working at it and eventually you will rebuild "tradfi."
px43 5y ago
If you think that's actually a good idea, then do it. Make a fork where people can have their money back, and see who follows you. There's no need to ask permission. The entire crypto-ecosystem thrives on crypto-darwinism. Projects experimenting with various forms of governance to see what survives, and what sticks. Axie's Ronin network was a centralized side-chain experiment. Unfortunately what got exploited was the bridge back to the more decentralized ETH Mainnet. They failed to have proper fail safes on the bridge, and they got looted. Maybe their project survives this, maybe it doesn't.

by adtac 5y ago

RL_Quine 5y ago

What is your threshold? Who decided what is "not legitimate" activity? Clearly in this case the money was spent using the keys that were allocated to be able to control the money, what process overrides that?

arcticbull 5y ago
I mean we have an answer to that, it's called the law, and its worked since 1750BC. [edit] This guy, Hammurabi - king of the First Babylonian Dynasty - faced a similar quandary, so there's some prior art. Disputes under the law are resolved in court.
- SketchySeaBeast 5y ago
  Isn't that anathema to the new world order the crypto people are espousing?
  - horsawlarway 5y ago
    Generally yes. As someone who has actually purchased real goods with bitcoin (silkroad) and has dealt with the blowback of the MtGox scandal (still receiving court details to this day...) Those crypto people are snake oil salesmen. Full fucking stop. They aren't interested in making anything usable, they're interested in wild speculation, gambling, and outright scams.
  - gonehome 5y ago
    There are lots of us that recognize the new capability crypto provides (improved self-custody over assets, currency scarcity not controlled by governments) while also not claiming a new world order. Like most things it's not all or nothing and there are pros and cons.
    - the_gastropod 5y ago
      Hitting yourself in the head with a hammer might offer some benefits: - The cool metal might cool your head on a hot summer day - Might knock yourself unconscious to avoid boredom (could be real handy during long flights!) But these nice features are inseparable from the fact that you're hitting yourself in the head with a hammer, which has many serious downsides, too. The "improved self-custody" crypto offers is one side of the ledger. The other side is: you lose regulatory protection, and can be swindled with virtually zero repercussions. Crypto's entire reason for existing is to circumvent government control—it's pretty "new world order" all the way to the core.
      - gonehome 5y ago
        This is a comparison dumb enough to basically be in bad faith. Ignoring that and focusing on the substance: > "The "improved self-custody" crypto offers is one side of the ledger. The other side is: you lose regulatory protection, and can be swindled with virtually zero repercussions." Yeah I don't disagree with this - the risks are real. Some of this can improve with better tools, but some is just higher risk that exists with self-custody. You don't need to move 100% of your wealth into crypto (and I'd argue you shouldn't in nearly all cases). Crypto provides a new capability to take control in a way that other options don't or don't support as well. There is value in this capability even though it has associated risks. > "Crypto's entire reason for existing is to circumvent government control—it's pretty "new world order" all the way to the core." Not all governments are good and even good governments can implement bad policy. Self-custody is a lever against the kind of top down CCP like control of entire economies and a totally controlled cashless future. It's also a hedge against stupid actions from your government (like what we're seeing in Russia currently). New world order suggests replacing the entirety of the existing thing. I'm not suggesting that, I'm focusing on the fact that it offers a new/improved capability that gives individuals more power. I think this is a good thing, but good/bad subjectivity aside it's just a true feature of crypto. https://www.lesswrong.com/posts/PeSzc9JTBxhaYRp9b/policy-debates-should-not-appear-one-sided https://www.lesswrong.com/posts/PeSzc9JTBxhaYRp9b/policy-deb...
- horsawlarway 5y ago
  No one in crypto typically wants to acknowledge this, but this is the clear and robust answer. Your keys your coins is obviously a situation rife for unreconcilable fraud, and is not a functional solution for anyone who might - ya know, want to spend these things as a currency.
  - xur17 5y ago
    I disagree. It's definitely a trade-off, and there are downsides to it (this security breach being a good example), but there are also advantages. With normal ACH and credit card transactions, the payment never really settles, and can be reverted due to fraud for months. That means I have to slurp up lots of data (privacy?) about my users in order to increase my confidence that they won't try to scam me. And even with that, I end up losing significant amounts of money due to payments with stolen card numbers, etc. With crypto, I know that any payment I receive is final, and I don't have to build privacy violating systems to avoid losing $$$. Not saying this is necessarily "better", but there are advantages to it. As a user, I'd be happy to pay with crypto if the merchant passed some of the savings on to me.
    - horsawlarway 5y ago
      What savings? The savings associated with transactions fees (reasonable for very large spends - utterly ridiculous for small amounts, even today after the major drops, at more than 1.7 USD/tx)? The savings associated with double spend fraud that occurs if you don't delay the transaction for 3 to 6 blocks even though you say it's final (hint - that's not true, and waiting is a large downside for prompt processing at a point of sale) The savings associated with being literally dragged into court because it turns out that fraud is still a thing, and the legal system still matters, and despite you saying that the transaction has settled - the courts can and WILL disagree? I just don't see it. I see a very nice way to send money to folks who are working dark markets and understand escrow (which re-introduces the risk that your transaction isn't actually settled), and a really shitty transaction method for basically everything else.
      - xur17 5y ago
- zaroth 5y ago
  The only way to apply the court’s judgement (in the case of ETH) is to hark fork, because there is no governance contract in place. A blockchain can in theory support such things, which would allow a majority vote to approve the court’s judgement, but not ETH as it currently stands. Alternatively if you could get enough miners to just collectively agree to replay the blocks without that transaction you could let the owners move the funds, but it’s monumentally difficult as time goes on and the number of blocks to rewrite increases. If it was detected in seconds, an emergency protocol does exist between certain large mining pools for this sort of thing. Specifically, if you have contracts holding that kind of balance, if a transaction appears on the network which touches a percentage of the funds, you get blistering alarms ringing and someone can “break glass / pull lever” to lock the contract balance into an emergency cold vault. It freezes the DEX but better that then lose the funds. You partner with mining pools to pre-clear that TX and ensure your transaction gets priority in the next block, before the attacker’s transaction goes thru (making theirs the double-spend). But they weren’t even watching. They didn’t even know until the next DAY.
  - jacques_chester 5y ago
    > The only way to apply the court’s judgement (in the case of ETH) is to hark fork, because there is no governance contract in place. Courts can and do issue orders against any kind of asset in order to enforce justice and unlike smart contracts, their orders are backed by men and women with dogs and guns. Put another way: a court will not say "gee, gosh, if only ETH had a mechanism I could give orders for! I guess I'm beaten". They will instead say "you owe $X and I will seize all assets you have today, or will ever possess in future, in order to pay that debt". And when it turns out that people thought they were clever by evading the court order by keeping everything in a coin, they will then learn that ethereum can't buy top bunk at the federal penitentiary if you don't have access to a computer.
    - zaroth 5y ago
      We are talking about two different things. I’m talking about a decentralized algorithm which runs on your own machine and can reach a conclusion about a transaction being invalid even though it may have a valid signature. For example, imagine the thief just burns the ETH. $600mm notional value is destroyed in a few bytes of crypto. Whether someone goes to jail or not is besides the point. Can the funds be recovered, and what is the algorithmic mechanism to provide for that recovery?
- the_gastropod 5y ago
  No no no. Crypto enthusiasts reject the idea of the law, and the tyrannical governments that enforce them. Code is Law! Therefore, this is perfectly legal. Conceding that this situation sounds absurd destroys the entire raison d'être of crypto.
  - koonsolo 5y ago
    Code is not law, consensus is law. Big difference! And it's not even law, it's consensus has value.
- xur17 5y ago
  Disputes can still be resolved like that in crypto, it's just up to the legal system to track down the key holders to revert the transaction. Essentially - solve it at the legal layer, don't complicate the protocol.
- noasaservice 5y ago
  Hammurabi's laws only work when they have a monopoly on violence to enforce said laws. Shitcoins (all of them) remove the potential of violence as a means of corrective action. Instead, you have crazy hard math stopping you. Can't do the math? Then you're not forcing your decision.
  - arcticbull 5y ago
    > Shitcoins (all of them) remove the potential of violence as a means of corrective action. Instead, you have crazy hard math stopping you. Can't do the math? Then you're not forcing your decision. Oh no they don't. You can still go to prison, and they can still smack you around. To pretend otherwise is to play emu.
  - acdha 5y ago
    Think about this a bit more: I steal your cryptocurrency. When the police show up at my door and I say “you’d have to solve an impossible math problem to get it back!” do they a) threaten beat me and/or my family (Russia, China, etc.), b) shoot my dog and put me in jail where they look the other way while other inmates beat me (U.S. version), or c) toss me in jail (best-case Scandinavian version) until I tell them the key? There isn’t any case where they say “math is hard, guess you get away with it!”
- quantified 5y ago
  Courts and the legal system are centralized authority, not sure they are compatible with the crypto vision.
- deleted 5y ago
  [deleted]

shakezula 5y ago

You’re describing a hard fork - exactly what created Ethereum and Ethereum Classic after the DAO hack. Even now it’s still considered a controversial move.

gonehome 5y ago
I think the majority sided with the move (which is why Ethereum soldiers on and EC is basically useless). It's a good final social check on bad behavior. I think Vitalik as written about this (I'm pretty sure I read about it in one of his long form posts).
- ohgodplsno 5y ago
  >I think the majority sided with the move (which is why Ethereum soldiers on and EC is basically useless). Hahaha, no, the wealthy sided with the move. Of the 82,054,716 ETH in existence, only 4,542,416 voted, for a total voter turn out of 5.5% of the total supply on 16 July 2016; 3,964,516 ETH (87%) voted in favor, 1/4 of which came from a single address, and 577,899 ETH (13%) opposed the DAO fork. Vitalik and his friends stood to lose a lot of money, and being the biggest players in town with their premined shitcoin, voted against them losing money.
  - gonehome 5y ago
    The vote is only one part of it. What people continue to use and build on is the other.
- trompetenaccoun 5y ago
  He's also written this, basically warning about something like the very situation now happening 2 months ago: reddit.com/r/ethereum/comments/rwojtk/ama_we_are_the_efs_research_team_pt_7_07_january/hrngyk8 The DAO "hack" was a bit different from this, around 14% of all Ether were in that contract. There isn't going to be another rollback, especially not for something like the here discussed attack. Trusting third parties is risky. It's like taking your money out of your bank account and sending it to a bank in Nigeria. Things can go wrong, the chain can't be rolled back every time someone loses money. People have to be more careful.

TheDudeMan 5y ago

Or maybe don't lend a valuable asset to a game studio.

dheera 5y ago

Maybe someone could invent the "FDIC" of crypto in smart contract form where everyone pays a periodic premium but if a hack occurs and there is consensus they get a payout. Only problem is everyone would have to use their own wallets for it to work, and for most people it's safer to store large amounts of crypto on an exchange instead of a wallet for personal security reasons.

itintheory 5y ago
> and for most people it's safer to store large amounts of crypto on an exchange instead of a wallet for personal security reasons. This is the opposite of what is usually recommended.
- dheera 5y ago
  Yep, I realize that, but having your own wallet means: - Everyone can track your transactions and personal wealth on EtherScan or similar tools, whereas in an exchange it is significantly obfuscated by the exchange's own collection of wallets and databases. - You could be robbed at gunpoint for your hardware wallet. - You could lose your wallet in a fire or other natural disaster. - While you can back up your wallet keys online, most people cannot remember the long passphrases, and end up writing them down on paper which isn't secure if someone were to break into your residence or office. For most users the combination of these risks far exceed the risks of keeping money in an exchange. But yeah, if you're a billionaire with a 24/7 personal security team and personal firefighter team, then yeah, by all means, keep your own wallets.
xur17 5y ago
> Maybe someone could invent the "FDIC" of crypto in smart contract form where everyone pays a periodic premium but if a hack occurs and there is consensus they get a payout. Nexus Mutual, and a few other on chain insurance protocols offer exactly this. You pay them some premium, and they pay out in case of losses due to hacks, smart contract vulnerabilities, etc. So far they've worked fairly well, and paid out in hacks like this that occurred.

woodruffw 5y ago

I'm not a cryptocurrency person, but my understanding is that that's happened before: ETH effectively rolled back the DAO hack[1] in 2016. The end result was the "Ethereum Classic" split, which continues to this day. There are all kinds of financial ramifications to this kind of split, nearly all of which (to the best of my knowledge) remain unsolved. The problem that you've correctly observed gets to the very root of why cryptocurrencies are a farce: if participants need the confidence of an ultimate human democratic process, you might as well kick the immutable public ledger to the curb, skip the tire burning, and use the financial system we already have. [1]: https://en.wikipedia.org/wiki/The_DAO_(organization) https://en.wikipedia.org/wiki/The_DAO_(organization)

misiti3780 5y ago
they hard-forked the DOA, the old fork is still traded as ETH Classic no?
- woodruffw 5y ago
  Yes, Ethereum Classic is still traded (although I have no idea how thinly). That's exactly why it's a problem: every account pre-fork now exists on two blockchains, and it's not clear what the tax, contractual, legal, etc. ramifications are of essentially doubling everybody's money. The nature of the blockchain also means that forks are destructive against innocent transactions: users doing "business as normal" who have the misfortune of being included in or after the rollback block have to re-coordinate all of their work.

deweller 5y ago

It was the centralized nature of this bridge (5 private keys required) that allowed this hack to happen in the first place.

paxys 5y ago

Well you can do anything with the ledger if there's consensus. That's how the entire thing works. How are you going to convince >50% of the mining pool to agree though?

qq66 5y ago

Keep working at it and eventually you will rebuild "tradfi."

px43 5y ago

If you think that's actually a good idea, then do it. Make a fork where people can have their money back, and see who follows you. There's no need to ask permission. The entire crypto-ecosystem thrives on crypto-darwinism. Projects experimenting with various forms of governance to see what survives, and what sticks. Axie's Ronin network was a centralized side-chain experiment. Unfortunately what got exploited was the bridge back to the more decentralized ETH Mainnet. They failed to have proper fail safes on the bridge, and they got looted. Maybe their project survives this, maybe it doesn't.