Hacker Steals $8.4M Worth of Ethereum from Veritaseum Platform

With that background in mind, I'm going to have to strongly disagree with your point on two grounds. First - yes, SWIFT was successfully attacked, and $800M is an egregious amount. But while security vulnerabilities can exist in essentially any type of software, it is significantly more difficult to get away with defrauding a banking institution out of seven digits or more. There is virtually no way to identify a single vulnerability and then exploit it to rapidly siphon funds out of the institution. If nothing else, the intermingling of various transfer protocols and identity constraints tends to make that very difficult.

When I was in that role, we were very frequently targeted. The only way attackers were ever able to successfully steal money from the bank was by first achieving identity theft or by compromising existing accounts. Here there is still an economic caveat - to achieve successful attacks against banks on the scale of what is currently rampant in Ethereum smart contracts, you generally need to reliably achieve a certain scale. The attackers tend to be groups acting in concert, and will actively look for institutions where a critical mass of accounts can have funds siphoned out of them.

In practice, this most often occurs when there is either 1) a truly egregious security flaw in the specific institution or 2) a major security breach that facilitates password cracking en masse against users who have accounts at the bank and use the same passwords. A good example of #1 would be an online bank that allows users to bypass the identity/address verification step in the account opening process (i.e. there may be a vulnerability that allows them to assign themselves a social security number without verification, skip parts of the verification process or change it later on). I was very good at making sure we never had such a serious issue.

That leaves #2, and it's the way that we were almost always attacked in practice. Password breaches would occur, we'd get a rash of accounts compromised, and those accounts would attempt transfers out of the system. Sometimes it was more complex (two types of compromised accounts involving C2C transfers, etc). We mitigated these through sophisticated rate limiting, aggressive logging and a lot of incident response. Sometimes it happened often enough to essentially become a dull background noise for us. But in my ~2 year tenure, the most I ever recall us losing in any single attack was about $15,000 (across hundreds of accounts), and I can count on one hand how often that happened.

So that's my first point, regarding inherently superior (or more charitably, "mature") security mechanisms. My second point is that a bank and a smart contract or an ICO aren't really analogous. They are both in the financial domain, but they have different risk profiles and functions. A smart contract would be more analogous to a regular contract, and while I am very willing to concede that smart contracts have theoretical benefits, it is very clear at the moment that the lack of a legal fallback (for now) is a weakness, even if it's also a strength. A smart contract and a contract are both generalizable, whereas a bank would more akin to a specific, constrained type of legal contract that houses money in exchange for certain privileges. Smart contracts are inherently more vulnerable than banks because they can be much more open ended in purpose and execution, without the corresponding legal oversight that regular contracts have.

An ICO is also not analogous to a bank; as the name implies, it's much more similar to an IPO. IPOs absolutely do not share the risk profile of ICOs, and there would be significant legal penalties if an IPO were manipulated in such a fashion as to cost investors tens of millions of dollars that simply evaporated due to fraud. No one would take the underwriting bank or the founding team seriously if they said, "well hey it's not a significant amount of money that was lost compared to our market capitalization." NB: I'm not talking about an overvalued IPO dipping in share price, I'm talking about a significant amount of the invested money literally being stolen from both the company and the investors with apparently no way to make either of them whole. The idea of this happening is conceptually beyond the pale for me.

Instead of a smart contract or ICO, a banking institution is more like a wallet or an exchange. And this brings us full circle to Mt. Gox, which actually was liable, much like a bank would be. In return for legitimacy and expanded utility, companies like Coinbase have had to accept an increasing amount of legal oversight and liability over the years.

You wrote: "Writing provably-secure smart contracts is as difficult as writing provably-secure software for any other Turing-complete platform". This is not true. Writing provably-secure smart contracts in something like C would be strictly harder than in Solidity because there are more classes of possible errors, and hence more properties to be proved. There are meaningful differences in the ease of proof even among Turing-complete languages. And some things you would have to prove explicitly for programs in one language are automagically "proved" for you by other languages' compilers.

So yes, you did suggest that any two Turing-complete languages are equally safe and secure.

> because you are obliged to agree with everything I actually wrote

Haha. No.

I believe that people have made formally verified (trivial?) contracts (based on the spec of the vm iirc? Not sure), but I don't remember anything about a formally verified contract being used in practice. People definitely are making progress on the formal verification front (building foundations/infrastructure/etc.) but they aren't really there yet. ("There" being, ready for widespread use, and in widespread use)

I don't really understand why people buy into many of these ICOs. I mean, I'm somewhat enthusiastic about "smart contracts", but I don't actually own any cryptocurrency.

I don't mean to say that I think all ICOs are bad, but given the number that are failing, I find it hard to imagine that the people buying into them are doing enough research into them before buying for it to make sense.

Also, I don't understand why people aren't building contracts on top of a contract layer that handles arbitration for reversing fraudulent transactions yet? I thought that would have been built by now.

You say "clearly unsafe" but there has been, to my knowledge, only one serious flaw identified, and that is what lead to the fork. Many of these ICO thefts have been suspected internal jobs, not as the result of a new vulnerability identified.

correct me if i'm wrong. If ETH is doomed, i'm happy to let best of breed win. But I'm not seeing an argument made with facts here - I'm seeing Fear, Uncertainty, and Doubt.

This is quite wrong; it's still considered a crime of stealing from the bank. The law does not care if you used a computer to do it instead of using dynamite to break into the safe, nor should it.

"Another way to put this is that you are using the contract in a manner how it was defined by the author."

No. If you are using an undisclosed exploit, then that is not true in the least. If you are using something that is not equally known to both parties, and equally disclosed, then it is fraud. No amount of, "you should have known better" or "you should have done your research" will help you. Take the recent case of the hack involving Etherium. It exploited something in the "smart contracts" which very few people knew existed, and, judging by the actions of the team in charge, clearly was not meant to be there. But beyond that, if the contract were to be disputed in court, one thing that would become very clear is that no rational person would be expected to believe that was the intention of both signing parties. And thus, it would be decided that the contract was fraudulent.

"If everything is decentralized and open to anyone, whose computer network are you intruding/disturbing?"

So if I forget to lock my door, then my house should be free game for everyone?