Blockchain / Distributed Ledger

Ethereum Hack Workaround Upsets Some Bitcoin Developers

Ethereum, the alternative digital currency that was the victim of a hack last month that caused close to $60 million of investors’ funds to fall under the control of an anonymous group or person, is facing warnings from some bitcoin developers who took issue with how the hack was reversed.

According to a report, the hack of Ethereum was reversed by using a so-called hard fork, or change in the programming code, that the community signed off on by a vote. The hard fork moved the funds to a new account where investors were able to withdraw their initial investment. That eased concerns with impacted customers, but it also raised concerns with bitcoin developers who contend that the move on the part of Ethereum alters what makes the currency platform so attractive and that it also generated bad press that could negatively impact all blockchain applications. With a blockchain, all of its users see the ledger of transactions, giving those involved the confidence that everyone is on an equal playing field. With Ethereum making a move based on an informal consensus, the fear is that other blockchains could make changes spurred by regulators.

Ethereum may be taking a hit by bitcoin developers, but it is getting increased support from Coinbase, which has been growing since this spring when Coinbase’s head penned a blog in which he argued Ethereum is at the forefront of digital currency. Around the time of the favorable blog post, Coinbase added support for Ethereum trading to GDAX, the cryptocurrency exchange for traders. And earlier this week, Coinbase announced system-wide support for Ethereum.

Coinbase is excited about Ethereum because the company says it’s unique in that it improves upon bitcoin rather than makes minor tweaks like other alternative digital currency. That’s made possible by Ethereum’s ability for applications to be built on top of the currency. By adding it system-wide, Coinbase is signaling that it believes the digital currency is here to stay.


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