In a couple of years, we may look back at July 9, 2018, as the second most tragic day in Ethereum history after the 2016 split of Ethereum and Ethereum Classic. On this day, Bancor, a decentralized exchange service, got hacked and lost its users’ 23.5 million dollars.
Since that day, and even though Ethereum rose to around $503 per coin on July 17, the cryptocurrency has been on a steady decline. Investors once again are losing faith in Ethereum’s smart contract systems, raising questions as to whether or not the cryptocurrency is decentralized in name only. Quite frankly also, they wonder if its system is strong enough to stand up to hackers and bugs! Cryptocurrency guru Andreas Antonopoulos offered up a few words regarding the situation.
Are Smart Contract Developers the New Middle Men in the Ethereum Universe?
In a recent Q&A session posted on his YouTube channel, Antonopoulos proceeds to refute the claim that smart contract developers are the new middlemen of Ethereum.
According to him:
“The trick is that people can build centralized and decentralized things and then hopefully the market gets to choose which ones to use so that they get the things that they want.”
He then proceeded to say that, basically, if one decides to get into a bad smart contract, it’s his fault, which is very true. In any type of transaction, one is required to read over the terms before accepting them.
The biggest scams in history have mainly come about because people are putting their money in places without reading the fine print! A lot of inexperienced investors also are not buying the bug card anymore. Instead, they believe that companies like Bancor or DAO were out to steal from them from the beginning. If there is any truth to those claims, we may never know! Smart contract developers may not be the gatekeepers of Ethereum, but some sure seem like the guys who sell fake tickets to a football game.
Smart Contracts Put People at the Mercy of the Developer
The biggest issue that investors had in the Bancor hack is that even though the money that was lost was stolen from the Bancor wallet, it was the investors’ money, and Bancor will not be held liable for the loss. If a normal bank gets hacked and a client’s money is lost, he will eventually get it back.
Smart contracts have allowed institutions to centralize a decentralized currency like Ethereum. That’s nothing new. Facebook, banks and membership sites all centralize the ultimate decentralized network that is the Internet! The bottom line is that Ethereum, like any other system blockchain or not, can develop bugs. The problem is that correcting a flawed smart contract isn’t exactly a walk in the park. Meanwhile, the contract continues to run with a person’s money inside it. Investing is a high risk, high reward business. Sorry to burst your bubble there, folks!