TAO Tumbles as Bittensor Blockchain Halts After Hack

Bittensor (TAO) has lost as much as 16% in the past week and 37% over the past month, with the recent hack contributing significantly to the latest downturn. At the time of writing one TAO is trading hands for US$236.20 (AU$351.71) compared to US$434.27 (AU$646.70) just a month ago.

Related: Bitwise Amends Spot Ethereum ETF Application Amid Trading Rumours for Next Week

Attacker Takes Funds, Forces Chain Into Safe-Mode

The price slump comes amid an attack on the network. Bittensor co-founder Ala Shaabana (@shibshib89) confirmed the attack and said the chain had been put “into safe mode” meaning new blocks are being produced but no transactions are happening.

The Opentensor Foundation (OTF) later confirmed that the chain had entered safe-mode and was placed behind a firewall after the attack, which “affected multiple participants in the Bittensor community”.

It had started with the attacker transferring funds out of users’ wallets into the hacker’s own wallet. The OTF quickly detected the abnormality and remedied the situation, effectively stopping all transactions.

Sparing you any technical detail, Opentensor will undergo a code review and “gradually resume normal operations of the Bittensor blockchain”. OTF will provide the community with updates as they happen, they said.

One user is said to have suffered a loss of 32,000 TAO equal to US$7.5 million (AU$11.6 million).

Vitalik Buterin Mentions TAO in Article, Price Rallies

Earlier this year Ethereum co-founder Vitalik Buterin wrote an insightful post about artificial intelligence and crypto where he discussed the intersection between AI and blockchain. Buterin noted that Bittensor uses crypto incentives to enhance AI systems’ trust and decentralisation, focusing less on extensive encryption compared to fully encrypted AI models.

The widely-shared article initiated a rally of TAO, which saw a 220% surge between February and March. As mentioned, TAO has since been hit by severe losses.

Beyond the price worries, Bittensor, backed by a robust community and strong fundamentals, is a decentralised network where miners contribute Machine Learning models, like a town populated by skilled residents.

Related: Bitcoin Dips Below $60K as Fed Chair Dampens Rate Cut Hopes

The network distributes tasks across various machines, rewarding the best AI responses with TAO tokens. Unlike Bitcoin, which is geared towards financial transactions, Bittensor uses TAO to govern computing power for AI tasks, aiming to standardise fair and transparent AI transactions globally.