Ethereum changed the rate from 300 to 400 US dollars. About a year ago, the blockchain revolutionary’s young history almost failed. But now growth seems to have no limits.
Just to remind you: A month ago today, the price of ether (ETH) was still around 90 US dollars. So anyone who bought a month ago is already recording a plus that is seldom found in this form on any traditional financial market. Around 344 % growth in one month – you can already hear some calling for a “bubble”!
The chart above shows the growth of the Ethereum addresses since the early beginnings at the end of 2015. Even those who found mathematics difficult at that time, and I count myself among them, notice something in the graph. Its growth is increasing – exponentially. The slope “seems to amplify itself”, to put it in lay terms. That at least somewhat explains the current increase. But those who have been following Ethereum for some time are astonished and ask themselves at least one question: Why has nothing changed in the middle of 2016?
The DAO disaster
A year ago something began that resembled the “Tower of Babel” on the Ethereum block chain. The DAO, or Decentralised Autonomous Organisation, was to take full advantage of Ethereum’s new top function: the Smart Contracts.
The DAO was to be a huge smart contract, a program that could manage itself and unite the votes of thousands of investors. The DAO was supposed to support the early Ethereum development. Investors could buy DAO tokens (see picture below) to get a voting right in the DAO. The DAO served like a huge voting machine: Everyone could vote for a pre-determined startup project. Then the DAO counted the votes. There is no electoral fraud, as the block chain is not fraudulent. A perfect democracy and the best catalyst for a young market – at least that’s how it should be.
But the DAO has been hacked!
At the beginning of June 2016 there were still about 12 million ethers in the DAO Smart Contract. At that time it was already an investment that set records! On 17 June, however, there were strange debits in the Smart Contract. An alarm was sounded and within hours 3 million ethers were transferred to an address by the attacker. An error in a so-called Split() function was exploited by the hacker. In response to criticism from the community, Ethereum boss Vitalik Buterin made it clear:
“This is an incident that specifically affects the DAO, Ethereum itself is perfectly secured.”
The hack brought the DAO and the Ethereum blockchain to their knees. It is the reason why we now have Ethereum (ETH) and Ethereum Classic (ETC). When the Ethereum Foundation team intervened in the source code to shut down the DAO, part of the community saw the immutability of the blockchain in danger. The community split into two camps:
ETH – According to the motto: “The blockchain is unchangeable, but as soon as the law is broken, the status can be changed – ‘Law is Code'”.
ETC – According to the motto: “The blockchain is unchangeable, even if the law is broken, the status must not be changed – ‘Code is Law'”.
About 3.6 million ethers were finally stolen at that time – today about 1.44 billion US dollars…
And Ethereum did not break. It remained silent for months around the Smart Contract blockchain. Since its price of 18.59 US dollars in June 2016, it has experienced a tremendous growth of 2,051%!