Ethereum
$4 Million in Ether at Risk
Around 34,200 current Ethereum smart contracts worth $4.4 million in ether are vulnerable to hacking due to poor coding containing bugs.
This is the alarming conclusion reached by five researchers from the United Kingdom and Singapore in their study. report titled “Finding Greedy, Prodigal and Suicidal Contracts on a Large Scale.”
In their article, the authors identified three broad categories of smart contracts which are easy targets to be hacked:
- Greedy: These contracts lock up funds indefinitely.
- Prodigious: These funds are diverted to arbitrary users.
- Suicidal: These contracts can be killed by any user.
Smart contracts and their codes exist in a decentralized blockchain network. Blockchain is the technology that underlies bitcoin. (See also: Understanding Smart Contracts.)
While smart contracts have been praised for their ease of use and relatively low costs, they are vulnerable to hackers. In 2017, $500 million was lost or stolen due to poorly coded contracts, and half of them involved Ethereum, Bitcoin.com reported. See also: (Second major Ethereum hack in a week results in $34 million theft.)
“We’re dealing with apps that have two very unpleasant features: they manage your money and they can’t be changed,” said Ilya Sergey, co-author of the report and assistant professor of computer science at University College London. told Motherboard.
The authors of “Finding The Greedy, Prodigal, and Suicidal Contracts at Scale” analyzed 970,898 smart contracts and found that 34,200 of them are easy targets for hacking. That means about 1 in 20 smart contracts are at risk.
“The maximum amount of Ether that could have been withdrawn… is nearly 4,905 Ether,” the authors wrote. Using the current price of around $894 per ETH token, that’s nearly $4.4 million.
The report adds: “Additionally, 6,239 Ether (approximately $5.6 million) is locked in posthumous contracts currently on the blockchain, of which 313 Ether was sent to dead contracts after they were deleted.” (See also: Ethereum Hacker Returns Stolen 20,000 Ether Worth $17 Million to CoinDash.)
Since the researchers didn’t reveal which smart contracts were vulnerable, they’re probably safe from hackers—for now. But the report’s co-author says that given the multimillion-dollar jackpot they could uncover, he wouldn’t be surprised if cyberattackers pounced on them. It just takes a little work to identify the contracts at risk. “If someone wants to exploit this idea, they’ll have to do at least as much work as we did,” Sergey said.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article does not constitute a recommendation by Investopedia or the author to invest in cryptocurrencies or other ICOs. As each individual’s situation is unique, a qualified professional should always be consulted before making any financial decision. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date of this writing, the author does not own any cryptocurrencies.