What Does the DAO Hack mean for Bitcoin and Ethereum?
Just a few days ago, CCN.LA created an article that summarized Martin Tillier’s opinion piece in which he titled “What Does Ethereum’s Massive Hack Mean for Bitcoin?” Martin Tillier is a financial advisor who writes for Nasdaq and is also clearly a Bitcoin supporter. He made note that Ethereum is touted as the cryptocurrency most likely to emerge as the “winner” currency, and “a VHS to Bitcoin’s Betamax”… which is silly to say because Ethereum was never announced as a currency nor was it ever meant to be a rival to Bitcoin. This just seems to be one of those reminiscent cases of “can’t we all just get along?” And why does it always have to be some oddly derived competition between the two?
To set the record straight- his written piece keeps referring to Ethereum as a currency, but it’s not. Ether is actually the currency and it is intended to be the gas to function the computer platform Ethereum, and all its applications. In Martin Tillier’s opinion piece on Nasdaq’s site, he originally does well in making that distinction, but then wavers and goes back to calling Ethereum a currency within the rest of the article. Which is confusing to the reader, and while he keeps saying he’s trying to put the whole thing into layman’s terms, using the two terms so interchangeably confuses their meaning and objectives.
Simplified: Ether is the currency. Ethereum is a computer platform. The currency Ether, and the platform Ethereum, were not hacked; the DAO (a contract that rides on the Ethereum network) was hacked. For example, say a person decided to download a popular investment program that was raved about, onto their Windows 8 desktop computer. Then suddenly, the program gets hacked into and funds that were transferred into the account on the program become stolen. This means there was a flaw within the program and not Windows 8. The computer and Windows software are still intact, thus use of both are still operable. So let’s stop all the “Ethereum is dead” FUD (as the Reddit acronym goes).
On the other hand, all new tech isn’t without its flaws, and to sit here and say, “Hey guys, Ethereum is fine and Ether is great!” while dismissing what transpired, would be foolhardy. It’s prudent to tell investors to move forward with caution- as it is with all investments.
In Martin Tillier’s article he states, “The fact that there is [sic] millions of dollars worth of Ethereum [sic] bouncing around between various accounts now hardly inspires the confidence that a currency needs.” He clearly means millions of dollars of Ether… and let’s refer back to the investment program analogy. Say these hackers start bouncing those stolen funds around between their accounts, does that mean people lose confidence in fiat money? Probably not.
Martin Tillier is surely a highly experienced financial advisor, and we’re definitely not trying to diminish his expertise or knowledge on financial affairs, however his article just shows us how much more we have to go in bridging the gap of understanding with Ethereum. And if he’s explicitly stating that the confidence in Ethereum has been damaged, he would not be wrong. But as his and others’ infallible faith in Bitcoin even after Mt. Gox have proven, confidence can always be restored.
*Note: The views and opinions expressed herein are the views and opinions of the author. Please do not view this article as investment advice. Research all virtual currencies thoroughly and/or contact your financial advisor before investing.*