A hacker stole $31M of Ether , what it means for Ethereum

20 july, a hacker pulled off the second biggest heist in the history of digital currencies.

Around 12:00 PST, an unknown attacker exploited a critical flaw in the Parity multi-signature wallet on the Ethereum network, draining three massive wallets of over $31,000,000 worth of Ether in a matter of minutes. Given a couple more hours, the hacker could’ve made off with over $180,000,000 from vulnerable wallets.

But someone stopped them.

Having sounded the alarm bells, a group of benevolent white-hat hackers from the Ethereum community rapidly organized. They analyzed the attack and realized that there was no way to reverse the thefts, yet many more wallets were vulnerable. Time was of the essence, so they saw only one available option: hack the remaining wallets before the attacker did.

By exploiting the same vulnerability, the white-hats hacked all of the remaining at-risk wallets and drained their accounts, effectively preventing the attacker from reaching any of the remaining $150,000,000.

Yes, you read that right.

To prevent the hacker from robbing any more banks, the white-hats wrote software to rob all of the remaining banks in the world. Once the money was safely stolen, they began the process of returning the funds to their respective account holders. The people who had their money saved by this heroic feat are now in the process of retrieving their funds.

It’s an extraordinary story, and it has significant implications for the world of cryptocurrencies.

It’s important to understand that this exploit was not a vulnerability in Ethereum or in Parity itself. Rather, it was a vulnerability in the default smart contract code that the Parity client gives the user for deploying multi-signature wallets.
This is all pretty complicated, so to make the details of this clear for everyone, this post is broken into three parts:

1. What exactly happened? An explanation of Ethereum, smart contracts, and multi-signature wallets.

2. How did they do it? A technical explanation of the attack (specifically for programmers).

3. What now? The attack’s implications about the future and security of smart contracts.

If you are familiar with Ethereum and the crypto world, you can skip to the second section.

1. What exactly happened?

There are three building blocks to this story: Ethereum, smart contracts, and digital wallets.

Ethereum is a digital currency invented in 2013 — a full 4 years after the release of Bitcoin. It has since grown to be the second largest digital currency in the world by market cap — $20 billion, compared to Bitcoin’s $40 billion.

Like all cryptocurrencies, Ethereum is a descendant of the Bitcoin protocol, and improves on Bitcoin’s design. But don’t be fooled: though it is a digital currency like Bitcoin, Ethereum is much more powerful.

1. How did this happen?

What follows is a technical explanation of exactly what happened. If you’re not a developer, feel free to skip to the next section, since this is going to be programming-heavy.

Ethereum has a fairly unique programming model. On Ethereum, you write code by publishing contracts (which you can think of as objects), and transactions are executed by calling methods on these objects to mutate their state.

In order to run code on Ethereum, you need to first deploy the contract (the deployment is itself a transaction), which costs a small amount of Ether. You then need to call methods on the contract to interact with it, which costs more Ether. As you can imagine, this incentivizes a programmer to optimize their code, both to minimize transactions and minimize computation costs.

ETH WALLET EXAMPLE: 0xa657491c1e7f16adb39b9b60e87bbb8d93988bc3;

ETH monitorin online example : etc.ethermine.org/miners/a657491c1e7f16adb39b9b60e87bbb8d93988bc3;