With Bitcoin reaching all-time highs, you would think that the rest of the market would be in hot pursuit…
But this hasn’t been the case. Over the past few weeks, Bitcoin has generated the most investor interest, gathering value as it rushes toward its divisive SegWit2x event.
Ethereum, however, is lagging behind. The digital currency has been dancing around the $305 mark.
And today, the world’s second-largest digital currency was dealt a major blow. Though it’s uncertain how this event will play out, smart investors should be paying attention.
Here’s what happened…
On November 7th, vulnerability was discovered within popular digital currency wallet Parity. This vulnerability has left hundreds of millions (exact amount unconfirmed) of dollars worth of Ethereum frozen and inaccessible to investors.
In the aftermath, people are starting to ask the important questions, including:
A. How this happened.
B. What this “black swan” event will mean for Ethereum.
But first, let’s start with the biggest question…
What Is the Parity Vulnerability?
Parity Technologies, the company behind the wallet service Parity, disclosed a code issue that could potentially wipe user wallets opened after July 20th. The error was first reported on GitHub by a developer who goes by the username devopps199.
This vulnerability is bad news for users who opened multi-sig wallets after July 20th. It’s also bad news for initial coin offerings (ICOs), of which many may have been affected.
Of the ICOs that have taken place within this time frame, there are a few that are fairly high profile. This includes Polkadot, which raised over $140 million. The project was cofounded by Gavin Wood, who is also a cofounder of Ethereum. That being said, with a high profile name and solid project, Polkadot attracted a lot of investor interest. The company has since confirmed to TechCrunch that up to 60% of its ICO funds could have been affected.
Outside of ICOs, investors are also in the lurch. With funds stolen, many of them can no longer access their ether.
At the time of writing, Parity Technologies does not believe that anything was stolen. Rather, it believes that the wallets are only locked:
How Will This Affect Ethereum?
It’s not uncommon for events like this to take place in the world of digital currency.
That being said, the Parity Wallet event is not a planned fork or tactic; It’s a coding error. And as such, it has shaken the faiths of many investors.
The Ethernodes website reports that Parity constitutes 20% of the network, meaning that the amount of Ethereum affected could increase from current estimates.
In the wake of the event, people are speculating about what will happen next. There are concerns over whether Ethereum will fork, as it did with Ethereum Classic, in order to recover investor funds. Considering that this has already happened once, many developers are opposed to this action.
For now, Parity has warned users against making new multi-sig wallets. The company is issuing updates on Twitter, which you can view here.
After the news broke, the price of Ethereum fell from $305 to around $290. Everyone appears to be waiting to see how investors will respond to the event. Since it’s still uncertain exactly how much Ethereum was affected by the event, many appear to be holding their ground.
Keep an eye on this article for updates. All updates on the event will be noted in the editorial notes above.
If you are interested in learning more about digital currency or wish to be notified about market events like the Parity vulnerability, you can to subscribe to our free Wealth Daily e-letter and get information on our FREE digital currency education service.
