Following a series of events: beginning with the creation on Ethereum of TheDAO, the largest crowdfunded project to date, and one of the first real-world examples of a decentralized autonomous organization; followed by a hacker exploiting some bad code in TheDAO's smart contract, stealing nearly $60 million worth of digital currency at the time; and culminating with an unprecedented and controversial hard fork, effectively splitting the Ethereum blockchain in to two parallel ledgers (Ethereum (ETH), which reversed the hack and Ethereum Classic (ETC) which did not subscribe to the hard fork and allowed the hack to persist). Now the anonymous hacker of TheDAO has begun cashing in his ill-gotten gains, and given a tip of the hat to the Ethereum Classic development team with 1,000 ETC (worth approximately $1,300). (See also: Why the DAO on Ethereum is Revolutionary)

Ethereum, the Hack and Ethereum Classic

TheDAO hacker exploited some bad code in a smart contract on the Ethereum blockchain, and did not "hack" it in the sense that they did not break or undermine any system in place. Rather, they just followed rules within the system that happened to allow them to funnel money out of TheDAO and to him/himself. As a result, and since TheDAO had raised nearly $150 million from various investors, there was a lot of pressure to mitigate the attack. A hard-fork followed, which effectively reversed the hack from occurring and returned all funds to the original investors. (For more, see: Why are There Two Ethereums?)

While this surely made those who lost money happy, it caused anger from parts of the community who felt that the hard fork violated the spirit and intent of a truly decentralized, leaderless system adhering to the virtues of censorship-proof and irreversible transactions. This group continued to validate the old version of the blockchain, with the hack still present, in what is now known as Ethereum Classic. Ethereum currently trades at around $12.00 while Ethereum Classic at around $1.25. (For more, see: Ethereum Reaches Consensus to Hard Fork, Fixing DAO Hack)

This past week, the Ethereum Classic wallet address that held the stolen funds began moving them to other accounts with the intent to cash in. In doing so, he or she also sent 1,000 ETC to the Ethereum Classic Development team, perhaps as a gesture saying thank you for letting me get away with at least some profit. Whether or not Ethereum Classic continues to persist is yet to be seen. (For more, see: Does Ethereum's Hard Fork Undermine Smart Contracts?)


John McAfee: Investopedia Profile

The Bottom Line

The hacker of TheDAO was stopped from getting his/her hands on the lion's share of stolen funds, due to a hard fork that reversed those transactions. However, a portion of the Ethereum community felt that the hacker did nothing "wrong" in the sense that bad code was exploited and this code was open for all to see - only the hacker took advantage of it. This created Ethereum Classic, and now that the hacker is beginning to draw down those stolen funds on the Classic network, where the hack was never erased, they gave a small tip of gratitude, 1,000 ETC, to the Ethereum Classic dev team.