Ethereum tries to recover after million-dollar hack

Attackers have successfully exploited weaknesses in the code of a fund on the Ethereum blockchain, draining it of US$50 million (A$67.3 million).

The DAO (Decentralised Anonymous Organisation) fund was set up for venture capital investors this May and raised a record US$120 million (A$162 million).

But unknown hackers have taken advantage of a vulnerability in a code function used for when members exit the investment scheme, and repeated the process until all the Ethereum digital coins in The DAO were drained.

The drained Ethereum coins cannot be used for another 27 days, meaning the attacker is yet to obtain access to the funds.

Ethereum's value had fallen from a high of A$34 to A$17 at the time of writing following the attack.

Getting the money back will be difficult for The DAO investors.

Vitalik Buterin, who created Ethereum in 2013, has proposed that a so-called soft-fork rollback of transactions within the blockchain through new code takes place so as to retrieve the money.

If 51 percent of Ethereum miners accept the new code, the blockchain will repair itself.

However, Robert Graham of Errata Security claimed the hackers were bribing miners not to fork by promising them a third of the purloined Ether. 

A key feature of Ethereum is that its distributed transaction ledger is programmable, allowing for "smart contracts" that permit far more flexibility and uses than is possible with Bitcoin.

The raid on The DAO along with several smaller heists of crypto coin has made Buterin rethink security around smart contracts, proposing measure to fix a range of bugs.

He listed the potential for multi-million dollar smart contract applications, coding and component standardisation, and improving the development environments.