Navigating the minefield of Token Offerings — Part 2

09 May 2019 . tech . Comments
#security #privacy #blocktopus

Last time we highlighted how critical trust is in a decentralized environment (ironically) and especially in Token Offerings. One aspect of the damaged trust between the end users and the decentralized ecosystem is cybersecurity. A decentralized system is usually built from many different building blocks (subsystems) and each one of them can have a negative impact on the overall system, when it gets compromised. A special category of building block is Smart Contracts. Smart Contracts are executable code that runs on a decentralized network, in an automated way. You can picture them as a vending machine that, once it’s programmed and filled with items, will keep serving the available items when someone drops a coin in it. Smart Contracts are the beating heart of a decentralized system. Αny kind of bug can be fatal to the overall system, since it will almost always have an impact on the funds of the Contract itself and its stakeholders.

The first major Smart Contract incident was the one of the DAO, which took place less than two months since its launch and affected 18,000 stakeholders who lost more than 3,6 million Ether. Another severe incident was the Parity wallet hack which resulted in more than 150,000 stolen Ether. Just these two incidents on the Smart Contract level, had an impact on funds that are currently valued close to $700,000,000.

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