By Robert Hackett
November 11, 2017

I interviewed Joseph Lubin, cofounder of Ethereum, the hottest blockchain network next to Bitcoin, on stage at the Web Summit tech conference in Lisbon, Portugal, this week. While we chatted, the world learned that hundreds of millions of dollars worth of Ether, the very much in vogue cryptocurrency Lubin helped launch in 2015, had effectively been vaporized.

The calamity was supposedly an accident. A self-described novice programmer going by the online alias “devops199” took control of a library of code used by certain digital wallets built by the Parity project, a group of crypto programmers. The code was hosted on the Ethereum blockchain, and it enabled multi-signature protection for cryptocurrency storage, where multiple keys are required to withdraw funds. Once the supposed amateur realized his coup, he executed a “kill” function that deleted the key bit of code—thus freezing accounts indefinitely. He rendered as much as $300 million in Ether inaccessible.

The lockdown affected all Parity-based multi-signature wallets created since July 20th. On that day, the Parity team updated its product to recover from another attack that allowed hackers to steal about $30 million worth of Ether from a few of these wallets. The developers failed to catch a mistake in the software that enabled anyone to claim ownership of that critical multi-sig code. It’s an ironic twist, given that the code was designed to help decentralize wallet ownership in the first place.

Despite the setback, the incident did not seem to diminish anyone’s enthusiasm for Ethereum at the Summit. I hosted another panel on ICOs, or initial coin offerings, a newfangled way to fund crypto ventures, that was packed to the brim with entrepreneurs interested in selling their own digital tokens. And its not just newcomers interested in the stuff. While prepping for another panel on how blockchains may affect the music industry, a manager for the musician Wyclef Jean probed for more information about the technology backstage.

As exciting a project as Ethereum is—and it is exciting—it is still young and untested. As I wrote in my profile of Ethereum’s boy wonder Vitalik Buterin a year ago: “Given the breaches, it’s fair to wonder: Will Ethereum and other blockchain networks ever be trusted enough to replace our current financial system?” We’re stilling grappling with that question today; Ethereum and its siblings hold much promise but, as Lubin agreed, there will be plenty more bumps and crashes along the way.

Enjoy the weekend.

Robert Hackett


Welcome to the Cyber Saturday edition of Data Sheet, Fortune’s daily tech newsletter. Fortune reporter Robert Hackett here. You may reach Robert Hackett via Twitter, Cryptocat, Jabber (see OTR fingerprint on my, PGP encrypted email (see public key on my, Wickr, Signal, or however you (securely) prefer. Feedback welcome.


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