For many, there is a lot of fear surrounding cryptocurrency. Is it safe? Is it a good investment? What even is it? There are definitely a lot of scams out there, including in dating, but it's not the only way to lose your money in the crypto space. The team from the Juno cryptocurrency learned this the hard way this week when they accidentally sent a bunch of currency to no one.
Earlier this year, a single user acquired a ton of Juno tokens through a "stakedrop." However, the community claims that the user, who turned out to be 24-year-old Japanese national Takumi Asano, gamed the system in order to acquire more tokens than he was allowed to during the process. Asano claims that he did nothing wrong and that the tokens were acquired by him for a consortium of investors.
In March, a straw poll of sorts was conducted amongst the Juno community. As it turned out, the community wanted to take the tokens away from Asano. However, despite the majority opinion, a controversy arose over whether it should happen or not. Acquiring for investors makes him an exchange, according to the community, and makes him ineligible for the drop. Finally, another official vote was conducted, and the decision was made to take the tokens away from Asano.
The drama led to attacks on the system, including a collapse of the blockchain for several days. The price of the currency dropped by over 60%. But the biggest problem to arise out of the situation came just recently when the organization overseeing the currency enforced the community's decision.
A developer on the team was given several pieces of information in order to begin the draw from Asano's wallet: Asano's wallet address, the wallet address to transfer to, and a hash value. The wallet address, for those who are not actively involved in cryptocurrency, is essentially your bank account number on your checks. It's how transactions are targeted at the correct place. The hash value is used to verify that a transaction is valid. Unfortunately, both of these values look similar and therein lies the problem.
The developer who was initiating the transaction copied and pasted the wallet addresses into the system. Except, he didn't. Instead, the destination wallet address was actually set up as the transaction hash rather than the wallet address for the wallet. So, when the transaction was executed, 3 million Juno tokens were transferred from Asano's wallet to absolutely nowhere because the hash value is not a wallet address. The end result is that this currency is always and forever lost to the insatiable gods of chaos.
The real issues
The first issue here, of course, is the ease with which so much currency was thrown into the incinerator. The ecosystem has a system for verifying transactions via a proof of stake process. Unfortunately, not a single verifier tried to invalidate the transaction for being nonsense. This highlights the holes in the "bulletproof" argument that cryptocurrency and blockchain advocates use. Obviously, the system, in this case, is far from bulletproof.
If you tried to send money from your bank to an invalid bank account, the transaction would fail. The money wouldn't be transferred into the ether never to be heard from again. If that happened, you can be sure that governments would be looking into Bank of America and Chase tomorrow. With crypto, however, this issue is likely to go completely ignored by everyone - except possibly the development team and Takumi Asano.
The other issue this brings up is the non-decentralized nature of the currency. Sure, we can say that cryptocurrency runs on blockchain which decentralizes data. However, in this case, the decentralized platform was still able to take tokens away from a user's wallet without the user's permission. That's far less decentralized than we are regularly told.