
Iota cryptocurrency shuts down entire network after wallet hack - miked85
https://www.zdnet.com/article/iota-cryptocurrency-shuts-down-entire-network-after-wallet-hack/
======
ronsor
I knew this coin would be a disaster, especially after the "tangle" issues and
home-grown hash function[1].

Iota also relies on a central server[2]. So many others[3] have criticized it
too.

[1] [https://medium.com/@neha/cryptographic-vulnerabilities-in-
io...](https://medium.com/@neha/cryptographic-vulnerabilities-in-
iota-9a6a9ddc4367)

[2] [https://domschiener.gitbooks.io/iota-
guide/content/chapter1/...](https://domschiener.gitbooks.io/iota-
guide/content/chapter1/current-role-of-the-coordinator.html)

[3] [https://medium.com/@thedrbits/why-i-also-find-iota-deeply-
al...](https://medium.com/@thedrbits/why-i-also-find-iota-deeply-
alarming-99d4f2da3282)

~~~
akerro
It doesn't matter. IOTA isn't a cryptocurrency, but a decentralized messaging
platform. Coin is a funding mechanism, it's more like matrix.org on financial
steroids, rather than bitcoin.

~~~
duskwuff
Can you name any applications that are using this "decentralized messaging
platform"? Or point to any technical demonstrations of its capabilities?

------
messo
The hack was apparently exploiting a vulnerability in a third-party dependency
in the wallet app, which is built on node.js. All these dependencies that is
used in the majority of modern apps seems like a huge security risk to me.
They make rapid cross-platform development possible, but at what cost?

Anyway; the network itself was not hacked, which is good I guess. And the
coordinator (centralized node) is said to be the training wheels which will be
removed at some point, but it still seems to be quite far of into the future.

~~~
mrtksn
I am somewhat pleased to see JS dependencies causing real-world problems and
losses. I was so fed-up with the dependency hell, I switched to native
programming. Especially programming for iOS using Swift is such a pleasure, we
still have the concept of dependencies and external libraries but the Apple
provided libraries are very rich so you would seldom need to import anything
from the wild.

After seeing the other side of the fence, I am quite surprised that anyone
would make native apps with Node.JS. In the time you set up your dependencies
for your Electron, ReactNative or whatever you can have your native macOS or
iOS app UI running. Also, wouldn't spin the fan when running.

~~~
arsome
The biggest problem as a desktop app developer is that all the good UI
libraries are barely maintained, obscure, questionably licensed or have
limited 3rd party compatibility meaning you have to build too much from
scratch yourself. This is why Electron has taken off so much lately for
desktop development.

~~~
api
> questionably licensed

People don't want to pay for anything, therefore we get...

> barely maintained, obscure, ... have limited 3rd party compatibility

Building anything really polished that isn't those things is a huge
undertaking that someone would have to pay for.

Electron piggybacks on the massive web ecosystem which is funded by SaaS,
advertising, and surveillance so it lacks the abandonware problem.
Unfortunately it's also not really built for the role of desktop or mobile UI
layer and so you get a bloated, insecure, slow mess when you try to shoehorn
it in there.

We don't get what we won't pay for.

------
simias
For those who haven't been following the previous episodes, IOTA is the
cryptocurrency that uses ternary logic because it supposedly makes it more
efficient (it very much remains to be proven). The idea is to bring
cryptocurrencies to embedded devices, which IMO like much of the
cryptocurrency space is very much a solution in search of a problem. Didn't
stop them from making a fortune with pre-mined coins during the cryptocurrency
boom.

I remember that a few years ago there was a lot of debate about whether IOTA
was truly decentralized. Advocates were arguing basically that "it's not
completely decentralized now but it will be soon". Well I guess we know were
we're at right now.

~~~
imglorp
Yeah the pre-mined coins were sketchy, and the ternary was dubious.

I don't want the innovation to get lost in the bathwater though: the tangle
datastructure was novel. Not an expert, but it was designed to allow for
minimal proof of work while retaining some hashed auditability and tamper
resistance. I think the key idea would be that you help hash several other
blocks into transactions and then your transaction will get hashed by a few
other workers. It didn't require heavy POW so it was more suitable for an
embedded device to perform on the edge.

~~~
api
The tangle is a DAG (directed acyclic graph). A DAG is a viable data structure
for a distributed database, but it has issues for a cryptocurrency where you
want to maintain consensus on a single objective global ledger.

~~~
bawolff
A DAG describes a wide variety of data structures and choices. Bitcoin is a
DAG.

Actually wouldn't any sort of structure that prevents double spending have to
be a dag? In order to prevent double spending you need to put transactions in
topological order (to know how much money the account has). If you can do that
your data structure is a DAG.

~~~
api
A block chain is a special sub-type of DAG in which (1) there is only one edge
from each node to a predecessor, and (2) there is only one canonical path
through the DAG at any given time and there exists an objective set of rules
for selecting this path. Usually nodes that are not part of this path are
eventually forgotten in a block chain.

------
malux85
Good thing there is a centralised node controlled by a single authority

Facepalm

~~~
bilekas
It has been known for years that it was not a truely decentralised currency,
ironically enough, they probably had some good foresight to retain that auth
node.

~~~
malux85
NO! Absolutely not! They should let the network govern itself because thats
one of the main differentiators (for better or worse) of crypto.

This _always_ happens with crypto - there's a hack, some people lose money and
then the community vibe goes out the window and there's software patches,
transactional rollback attempts, network forks, and so on.

Part of the risk of a decentralised autonomous system is that it's
DECENTRALISED AND AUTONOMOUS. If you lose money because of a hack THATS PART
OF YOUR RISK PROFILE. DEAL WITH IT.

Having a centralized node with a single authority mitigates some of the
uncomfortableness of the original hack, and might get some or all of the money
back - but the cost of that is undermining the entire network ethos. This
currency is a single issuing authority who can dictate the rules when it suits
them and pull the plug if things get uncomfortable.

~~~
perl4ever
"THATS PART OF YOUR RISK PROFILE. DEAL WITH IT"

If you set up a libertarian community in which everything is privatized, and
then one day your home catches on fire, but you don't pay for firefighting
service, it sucks to be you, but is your neighbor* going to just say "that's
part of your risk profile, deal with it"? Laws and philosophies are one thing,
but there are predictions you can make about the actions of people separate
from that, and so your rules and abstractions have to be compatible.

*who shares a wall

~~~
amyjess
It's almost like cryptocurrency advocates are starting to discover the
benefits of fiat currency and modern financial regulation one at a time.

~~~
perl4ever
I mean, governments can collapse, fiat currency can fail, financial regulation
can be corrupted, so it's entirely possible in ten years everybody _will_ be
using cryptocurrency, because everything else has gone to hell.

In general I don't believe in trying to hedge against _everything_ going
wrong. I want to be rich in the future where money can buy, say, immortality
or space travel, not in the Mad Max future where money just makes you a
target.

~~~
TylerE
It’s especially dumb when your “everything goes wrong” system requires power
and the internet.

~~~
perl4ever
I think this criticism is a bit off. We can see that there are places in the
world today where the government and financial systems are really fucked, but
people do use crypto, so it is conceivable that sort of situation will spread
and take over the developed world. But it would be the new dark ages, not a
glorious future. If it did happen, my hope is that like everything these days
it would happen faster and be over sooner.

------
seanwilson
Is this the correct diff for the patch that tries to fix the wallet exploit?

[https://github.com/iotaledger/trinity-
wallet/pull/2565/files...](https://github.com/iotaledger/trinity-
wallet/pull/2565/files#diff-bafa027c31caffa28093844213af12a7L38)

The commit removes these lines:

    
    
        - const script = document.createElement('script'); 
        - script.src = 'https://cdn.moonpay.io/moonpay-sdk.js'; 
        -
        - document.write(script.outerHTML);

------
bawolff
Everyone concentrating on iota being a bs cryptocurrency. Which fair enough
but i think that kind of burries the actual story:

People trying to make a currency involving large sums of money don't even have
the security controls to check they are not loading malicous dependencies from
npm! This is not some fancy crypto hack, this is plain old boring compromised
dependency from an ecosystem with a reputation for high profile compromises.

~~~
timdorr
Actually, it's way worse than that. They were directly loading code from
someone's CDN: [https://github.com/iotaledger/trinity-
wallet/pull/2565/files...](https://github.com/iotaledger/trinity-
wallet/pull/2565/files#diff-bafa027c31caffa28093844213af12a7L38)

~~~
mdni007
It really can't get any dumber than that

------
dannyw
It's not a real cryptocurrency if someone can shut the whole network down.

~~~
bilekas
If you read the article, you would see that just the node with signs the
transaction as legit was taken offline for the moment while they work on it.

Your definition of crypto currency and decentralised currency is conflated
too.

~~~
vinniejames
The very existence of "the node" makes it not a cryptocurrency

~~~
Uberphallus
It's a cryptocurrency, just not decentralized.

~~~
byte1918
I would have agreed with you but after checking wikipedia, decentralization is
actually the first requirement for it to be called a cryptocurrency.

> 1\. The system does not require a central authority, its state is maintained
> through distributed consensus.

[https://en.wikipedia.org/wiki/Cryptocurrency#Formal_definiti...](https://en.wikipedia.org/wiki/Cryptocurrency#Formal_definition)

[https://www.merriam-
webster.com/dictionary/cryptocurrency](https://www.merriam-
webster.com/dictionary/cryptocurrency)

~~~
true_religion
The codebase doesn't require a central authority, but in practice all keys for
top level auth are held by the same entity.

~~~
bawolff
Sort of like how society doesn't require me to not be a billionaire, but in
practise i'm not a billionaire.

Code not deployed and probably never tested (perhaps never even worked) does
not count.

------
Huycfhct
It was always a scam for gullible fools

~~~
Huycfhct
Beautiful website though. All these ICOs have nice marketing

~~~
vorpalhex
Well yeah, how else are you going to get investors past your hand-wavey
technical-sounding nonsense? You could sell homeopathy to investors these days
as long as it had a nice enough marketing website (see Goop).

~~~
perl4ever
I think you are downplaying how mainstream homeopathy is. I believe CVS has
carried homeopathic OTC products for years. And I don't get the impression it
particularly bothers most people. If you think the "placebo effect" is a
thing, then homeopathy is justified even if the only person who believes in it
is the patient. Someone _might_ see this as moral/intellectual rot and
corruption, but that seems kind of like a fringe, wild-eyed/haired attitude.

~~~
vorpalhex
If homeopathy consisted of selling tubes of plain water with a label of "may
help the common cold", I wouldn't really have a problem with it.

Instead recommending people to take crazy doses of supplements, making
entirely crazy claims like "cures strep throat" or "can prevent infections" or
generally pushing unregulated supplements is absolutely preying upon the weak,
weakening the ability of medical providers to actually do their job and is
nothing more than naked profiteering by private companies. Anybody supporting
or pushing homeopathy is immoral.

~~~
gruez
>selling tubes of plain water with a label of "may help the common cold", I
wouldn't really have a problem with it.

AFAIK they would also need the standard FDA disclaimer of

>This/these statement(s) have not been evaluated by the Food and Drug
Administration. This product is not intended to diagnose, treat, cure or
prevent any disease.

edit: apparently there's an exemption for homeopathic medicine, so they don't
need it. That's a shame.
[https://rationalwiki.org/wiki/Quack_Miranda_Warning#Homeopat...](https://rationalwiki.org/wiki/Quack_Miranda_Warning#Homeopathic_exception)

~~~
perl4ever
I thought the products I've seen in mainstream stores have the disclaimer. But
maybe I should look again.

------
jrpt
For those who are wondering what happened, an attacker loaded malicious
JavaScript through some compromised third party library.

This isn't unique to cryptocurrency, although the permanence of crypto
transactions makes it pretty concerning there. Similar Magecart type attacks
have been stealing credit card numbers from websites including British
Airways, Ticketmaster, or Macy's, right off the checkout page.

Most sites still would have no idea if this were to happen to them today.

That’s why I’ve developed Enchanted Security
([https://enchantedsecurity.com/](https://enchantedsecurity.com/)) - a client-
side firewall that tracks the network requests and even blocks malicious ones.
It’s like a network firewall but running on your users’ browsers. It can run
on other JS platforms too, like Electron or React Native, which are commonly
used for crypto wallets. Get in touch if you’re interested in learning more.

~~~
bawolff
Bit of an unfair comparison there with csp on your website there. You cite the
article that most csp policies are ineffective at preventing xss, but xss and
data exfilitration are different things, and csp policies that are ineffective
at blocking xss are often effective at blocking data exfiltration.

------
qertoip
5 days of downtime and counting:
[https://status.iota.org/](https://status.iota.org/)

------
cryptica
Funny how even terrible, existential news barely affects the price of a
cryptocurrency.

~~~
koonsolo
Since the network is down, can this still be traded?

I know exchanges use 1 big wallet, and internally keep track of who owns what.
So in practice you would still be able to trade, just not able to add or
request funds.

But if all exchanges block trading, nothing can happen to the price can it?

~~~
mopsi
> _Since the network is down, can this still be traded?_

Yes. Trading generally happens off-chain, simply by changing account balances
in exchange's database. Actual on-chain transactions don't take place until
funds are withdrawn from the exchange (which is why they should not be kept
there for long - obvious hacking risk).

------
keenmaster
Trust is a big part of a credible cryptocurrency. Can you really trust a
currency that the vast majority of people don't understand?

I don't think cryptos will ever take off without widespread institutional and
gubernatorial support. Governments will probably issue cryptos themselves
eventually. They are an opportunity for the government to create a centralized
Federal Retail Bank that reduces the amount of rents and subsidies captured by
commercial banks. Every citizen would have a free digital checking account,
fully backed by the issuing government. When someone wants a loan, commercial
banks and fintech companies would get temporary access to user data to compete
on providing that loan. The data would only be used for that loan in
particular, and it would be illegal to use it for any other purposes, or to
retain it after the loan is done.

The government cryptos would have to be as impermeable to hackers as your
current digital bank account with (insert Big Bank here). Obviously, while
such a system has tangible consumer benefits, it wouldn't be nearly as
libertarian as Bitcoin.

~~~
baby
I don't think your argument makes sense. People use things that they don't
understand every day. Do you understand how a plane works? Or how the current
banking system works? Or even how HTTPS and the CA system work?

~~~
keenmaster
People generally know how dollars work. They don’t know much about the
monetary system from a macro standpoint, but a dollar is a dollar.

There’s no wallet code on a flash drive that you can lose. There’s no weird
pseudo-bank. There’s no mining (which adds huge transaction costs to the
network).

If a new VC-backed company called Mt. Zox said “keep your cryptos with us, we
have the latest in crypto security. Here are all the virtually
incomprehensible protections we have. Trust us, we’re better than the Other
Guys” how can you fully evaluate them? Even if they have great standards on
paper, how do you know that they will be upheld in practice? How do you know
that there’s no backdoor for hackers or company founders to use? Even if you
do all your research before investing, you’re still a sitting duck with the
tail risk of capricious losses.

My point isn’t that full understanding is a prerequisite for widespread crypto
adoption. However, there is a “tangibility-trust” axis with currencies. The
less tangible the currency is, the more trust is required in the issuing
institution.

Gold is more tangible than dollars. Physical dollars are more tangible than
digital dollars. Digital dollars are more tangible than cryptos. _Bitcoin took
a step down in both intangibility and institutional trust_. It is,
essentially, a currency backed by full faith in speculation, illicit activity,
asset hiding, and under the radar transactions.

Side note: I changed “trust something” to “trust a currency” in my OP to be
more specific.

~~~
baby
People understand dollar bills, but they don’t understand their credit card
and the visa/mastercard network.

You’re making the error of talking about cryptocurrency from the network
perspective instead of the ecosystem perspective. You can compare a
cryptocurrency with a financial backbone. A bank/credit card/any financial
service can be sitting in front of both a cryptocurrency network or the
current financial network and users wouldn’t see a difference (well except
lower fees)

~~~
keenmaster
Theoretically, what’s going on behind the scenes shouldn’t matter. However,
you could only trust the system to properly implement this extremely
intangible technology if you fundamentally trust the organizations involved.
Again, how do you know that their representations regarding the currency are
true? How do you know that the amount of crypto withheld for the founding
organization is fair or won’t overly dilute the network? How do you know there
are no backdoors? If the crypto is pegged to another
currency/commodity/crypto, how do you know that the peg will work in practice
(this is very hard)? How do you know that the organization is actually holding
the pegged currency in reserve, like they said they would? Even if the
currency is perfect, how do you know that your wallet provider is safe/not
inadvertently malicious? What recourse will you have if you get hacked? (none,
and if someone says “that’s not fair, Chase can be hacked too” - sure, but
that’s less likely, and the U.S. will step in to help, which gets back to my
point about institutional backing) Some of these concerns exist with large
established banks, but we don’t really care because 1. They have a great
history of keeping your assets safe 2. They have the backing of the
government. 3. The Federal Reserve is in charge of our monetary system, and
whatever beef one may have with them, they are far, far better than a small
group of friends who wrote a white paper somewhere.

Don’t forget the massive cost to compensate miners for all the time,
electricity, and computing power that they use. If you amortize those costs,
they far surpass even Amex’s credit card fees. Also, what’s with the whole
>50% control condition? So now I have to worry about a top secret Russian
organization with dozens of 160 IQ scientists racing to create a quantum
computer that can overwhelm some/all cryptos and bring wealth to the
motherland? I’m half-joking, but that’s the kind of technological weirdness
that I’m not comfortable with, much less the average person.

------
3fe9a03ccd14ca5
> _the IOTA Foundation shut down "Coordinator," a node in the IOTA network
> that puts the final seal of approval on any IOTA currency transactions._

Wait a minute... I thought cryptocurrencies were immune to manipulation, and
decentralized?! /s

------
RichardHeart
If you don't mind lots of cursing, I think I sum up IOTA pretty well here.
[https://www.youtube.com/watch?v=h6C5DJGg4Lg](https://www.youtube.com/watch?v=h6C5DJGg4Lg)

------
alfiedotwtf
> the IOTA Foundation shut down "Coordinator,"

If a single org can shut down a cryptocurrency, you might as well use PayPal.

------
bfrog
What was the purpose of iota anyways, last I looked I couldn't get past the
marketing speak.

------
catalogia
It's a good thing cryptocurrencies aren't used for anything important.

------
brazzy
And this right here is why the very basic principle of a cryptocurrency is a
terrible idea.

You _don 't_ want decentralized anonymous immutable transactions for your
money.

You really, _really_ don't.

~~~
bilekas
> Don't want

Thats not really an argument to make. Maybe you can say you "don't need" and
make some arguments for that, but telling people what they don't want..
Doesn't seem helpful .

Also

> very basic principle of a cryptocurrency The BlockChain is a very good
> principle. But again I don't think you're sure the difference.

~~~
brazzy
> Thats not really an argument to make. Maybe you can say you "don't need" and
> make some arguments for that, but telling people what they don't want..
> Doesn't seem helpful.

I stand by my statement. People certainly _think_ they want those things, but
they're wrong. Because they want them only until something like this happens
and their money is gone because of an error someone else made. Then they
suddenly want a way to get back their money a whole lot more, but it's
impossible because of exactly those things they thought they wanted.

> The BlockChain is a very good principle.

It's a good principle for getting distributed, (possibly anonymous) immutable
transactions. It's an absolutely terrible idea to apply that to money. I don't
think anyone has yet found a practical application it's better suited for than
all the alternatives.

> But again I don't think you're sure the difference.

I'm sure I understand the difference better than you.

------
dutchbrit
People tend to forget that this is alpha software - bugs happen. And re:
centralization, decentralizing something too fast is the dumbest thing to do.
Easier said than done, but it's something they've been working on for a while
from what I've read.

Last time this happened with Ethereum for example, they split the chain in
Ethereum Classic and the "New" Ethereum. Also not an ideal scenario. At least
they are transparent/actively working on fixing this issue.

~~~
Nursie
> alpha software

That they have been encouraging people to invest in and speculate on for years
now.

------
tanastasiu
This seems like fake news because there is no significant crash in the price.

~~~
tyingq
_" within 25 minutes of receiving reports that hackers were stealing funds
from user wallets, the IOTA Foundation shut down "Coordinator," a node in the
IOTA network that puts the final seal of approval on any IOTA currency
transactions."_

Hard for the price to crash when they shut down the network 25 minutes after
the hack.

~~~
mihaifm
Trading on exchanges can still theoretically continue, it's just deposits and
withdrawals that won't work.

~~~
Glosster
You must understand that people holding IOTA after the last network halt
(which was ~45 days ago), aren't very bright.

