Didi Chuxing said it would overhaul its app, as well as safety and security practices, after the death of a passenger focused attention on the company.
Abraham Othman Contributor Abraham Othman is a visiting scholar in the Operations, Information and Decisions department of the Wharton School (University of Pennsylvania). He is an advisor to a number of blockchain applications including Augur, Codex, and Decent. Blockchain technologies have a well-earned reputation for hacking and fraud, but the recent theft of more than twenty million dollars of second-tier cryptocurrencies like Bitcoin Gold, Verge, and ZenCash was a fundamental attack on the core mechanisms that allow cryptocurrencies to function. The way that most blockchains (including Bitcoin and Ethereum) function now is called Proof-of-Work; miners must solve hard computational problems to add new blocks of transactions to the chain and the majority (i.e., 51%) of the computational power can determine what transactions appear in the public ledger. In May and June, these second-tier cryptocurrencies suffered from what is called a “51% attack” , where attackers rented more processing power than the honest participants of the network, enabling them to control the transaction register and engage in nefarious behavior. For instance, an attacker could steal from an exchange by sending a deposit of compromised cryptocurrency, cashing it out, and then striking the initial deposit from the public ledger. A new working paper from my friend and occasional collaborator Eric Budish , an economics professor at the University of Chicago’s Booth School of Business , argues that any blockchain with reasonably low transaction fees is fundamentally vulnerable to 51% attacks. The risk of these attacks was known, informally, from the earliest days of cryptocurrency, and to counter this risk exchanges do not immediately credit deposits. Instead, they wait for deposit transactions to “age” on the blockchain in an escrow period. The assumption is that it would be hard for an attacker to control more computational power than honest miners for the whole escrow period. Budish tests this assumption through a sophisticated simulation. He finds that, because it is easier for an attacker with majority compute capability to mine blocks than the honest network, escrow periods provide far less protection than has been thought previously. Budish’s simulations suggest that increasing escrow periods 100-fold would generally increase the cost to an attacker by less than ten times. The most pointed criticism of Budish’s argument is that it does not match the observed facts of the blockchain ecosystem