‘$300m in cryptocurrency’ accidentally lost forever due to bug

‘$300m in cryptocurrency’ accidentally lost forever due to bug, by Alex Hern.

More than $300m of cryptocurrency has been lost after a series of bugs in a popular digital wallet service led one curious developer to accidentally take control of and then lock up the funds, according to reports.

Unlike most cryptocurrency hacks, however, the money wasn’t deliberately taken: it was effectively destroyed by accident. The lost money was in the form of Ether, the tradable currency that fuels the Ethereum distributed app platform, and was kept in digital multi-signature wallets built by a developer called Parity. These wallets require more than one user to enter their key before funds can be transferred.

On Tuesday Parity revealed that, while fixing a bug that let hackers steal $32m out of few multi-signature wallets, it had inadvertently left a second flaw in its systems that allowed one user to become the sole owner of every single multi-signature wallet.

The user, “devops199”, triggered the flaw apparently by accident. When they realised what they had done, they attempted to undo the damage by deleting the code which had transferred ownership of the funds. Rather than returning the money, however, that simply locked all the funds in those multisignature wallets permanently, with no way to access them. …

Effectively, a user accidentally stole hundreds of wallets simultaneously, and then set them on fire in a panic while trying to give them back. …

Ethereum has rapidly become the second most important cryptocurrency, after Bitcoin, with its price increasing more than 2,500% over the past year. One token of Ether is now worth a little over $285, up from $8 in January.

Bah! Mere teething problems. Maybe. Ever noticed that newer types of money are ever easier to create, but are more fragile?

  • Gold is hard to find and dig up. But it so durable and untarnishable that it can be reburied or lie on the ocean floor for centuries, and when it’s recovered it’s as good as new.
  • Cash is easily made from paper by printing, but is destroyed by fire and water and so on.
  • Cryptos only exist in computers — live by the computer, die by the computer. Oops. Wasn’t it one of the founders of Apple Computer who said you should never trust a computer you cannot throw out a window?

Ethereum-Wallet and Mist Beta 0.8.1, which contains geth 1.4.10 with the Hard Fork choice. Simple.