Blockchain company DAO recently faced a major setback, as a hacker exploited a vulnerability in its system, leading to a loss of $50 million. This incident has raised questions about the security and reliability of smart contracts, which are a fundamental part of blockchain technology. DAO’s smart contracts, essentially self-executing agreements written in code, were found to be flawed. The hacker manipulated these flaws to siphon off a significant amount of the cryptocurrency, Ether.
This event has fuelled debates around the efficacy of smart contracts, with critics arguing that they may not be as smart as they are touted to be. The incident has also highlighted the need for robust security measures and thorough testing of smart contracts before they are deployed. The fact that the hacker was able to exploit the vulnerability even after it was publicly identified, underscores the urgency of this requirement.
Despite the setback, DAO’s experience does not spell the end for smart contracts or blockchain technology. Rather, it serves as a cautionary tale, emphasising the importance of vigilance, rigorous testing, and robust security systems in the rapidly evolving world of digital currencies and blockchain technology.
Go to source article: http://www.bloomberg.com/view/articles/2016-06-17/blockchain-company-s-smart-contracts-were-dumb#footnote-1466190825720-ref