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DAO Attack Fallout Sees Public Blockchains Questioned by Australian Bank

Last Updated March 4, 2021 4:49 PM
Samburaj Das
Last Updated March 4, 2021 4:49 PM

The ANZ Banking Group, a major banking corporation in Australia and New Zealand is exploring and investing in blockchain technology. Like most other banks, it is focusing on private ledgers, unlike a public ledger like the bitcoin blockchain.

The recent hack-attack of the DAO is more proof that public blockchains are far too risky to be embraced by private banks, according to Nicholas Groves, ANZ group strategy executive manager.

Groves pointed to the DAO attack, highlighting the incident while speaking at the  in Melbourne, Australia, last week.

“The point about who controls a public blockchain is slightly worrying and what happened with Ethereum two weeks ago is a great test case,” Groves stated, in quotes reported by the Australian Financial Review .

Furthermore, he underlined the reason, as he saw it, as to why ANZ and presumably other banks aren’t looking enthusiastically at public distributed ledger technology.

He said:

Had we been running something on Ethereum that was not the DAO and everything got rolled back, we’d potentially lose two weeks of stuff and for a bank, that’s quite risky.

Groves was speaking just a day after a proposed soft-fork solution for the DAO attack was ruled out after containing a vulnerability ripe for an exploit. The “[s]oft fork is out,” Ethereum foundation spokesman George Hallam told CCN.com.

From an operational standpoint, Groves insists that private blockchains will prove to be more “sensible” than public blockchains.

“For a lot of what banks need to do, private blockchains are the most sensible and realistic option, and more than that it’s actually a technology that’s been around for quite a long time,” Groves stated. He was pointing to the work of computer scientist Leslie Lamport, a pioneer in the field of distributed systems and computing, decades ago in the ‘70s and ‘80s.

Indeed, a lot of private banks, including the major ones from around the world have banded together as a part of the R3-led banking blockchain consortium, R3CEV. Under a common roof, banks, financial firms and investment houses are exploring blockchain solutions for the industry, together.

“If we can work out the bits we really need, we can progress toward operational solutions in reasonable short time frames, because we’re avoiding a lot of the new, complex and very hairy issues with [public ledgers],” Groves added.

Featured image from Shutterstock.