IT Hiccups of the Week

We turn our attention in this week’s IT Hiccups to one of the truly major IT ooftas of the past decade—one that was back in the news this week: the meltdown of the IT systems supporting the RBS banking group. (That group includes NatWest, Northern Ireland’s Ulster Bank, and the Royal Bank of Scotland.) The meltdown began in June 2012 but wasn’t fully resolved until nearly two months later. The collapse kept 17 million of the Group’s customers from accessing their accounts for a week, while thousands of customers at Ulster Bank reported access issues for more than six weeks.

Last week, Sky News reported that the UK’s Financial Conduct Authority (FCA) informed RBS that it was facing record breaking fines in the “tens of millions of pounds” for the malfunction, which was blamed on a faulty software upgrade. In addition, the Sky News story states that the Central Bank of Ireland is looking at imposing fines on Ulster Bank over the same issue.  The meltdown has already cost RBS some £175 million in compensation and other corrective costs.

In the wake of another major RBS IT system failure last December, RBS CEO Ross McEwan admitted the bank had neglected its IT infrastructure for decades. Last year, RBS said it would be spending some £450 million to upgrade its IT systems, but that figure was upped to over £1 billion this past June.

According to Sky News, RBS “could receive a discount of up to 30 percent on the proposed penalty if it agrees to settle within the 28-day window under FCA rules.” Seeing how RBS already has admitted that it has been short-changing its IT investiment, it is hard to see why the bank would decide to contest the fine.

In a separate story, Sky News reported that the UK’s Prudential Regulation Authority (PRA), which is part of the Bank of England, has sent a letter to the UK’s biggest banks “demanding” that they improve the resilience of their IT systems. The PRA has given the banks until mid-December to report on what they are doing to ensure their IT systems are robust.

Some wags wondered, however, whether the PRA was going to be conducting a resilience assessment of the Bank of England’s IT systems. That bank suffered a highly embarrassing outage of its own a few weeks ago.

In Other News…

eVoting Problems Crop Up Across US in Mid-Term Elections

LA Unified School District IT Problems Just Keep Mounting With No End in Sight

Singapore Exchange Goes Down Due to Power Outage

Computer Failure Halts Deutche Borse Trading

PayPal Experiences Server Problems

Hundreds of Parents Panic When California School Sends Out Erroneous Missing Student Message

Kansas-based Spirit AeroSystems Has ERP troubles

Ticketmaster Declines to Honor Mispriced Online Circus Tickets

Pawtucket City Rhode Island Sends Out Erroneous Car Tax Bills

New Microsoft Band Has Daylight Saving Time Glitch

Xfinity New X1 Cable Box Users Suffers Multi-state Outage

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The Spectacular Collapse of CryptoKitties, the First Big Blockchain Game

A cautionary tale of NFTs, Ethereum, and cryptocurrency security

8 min read
Mountains and cresting waves made of cartoon cats and large green coins.
Frank Stockton

On 4 September 2018, someone known only as Rabono bought an angry cartoon cat named Dragon for 600 ether—an amount of Ethereum cryptocurrency worth about US $170,000 at the time, or $745,000 at the cryptocurrency’s value in July 2022.

It was by far the highest transaction yet for a nonfungible token (NFT), the then-new concept of a unique digital asset. And it was a headline-grabbing opportunity for CryptoKitties, the world’s first blockchain gaming hit. But the sky-high transaction obscured a more difficult truth: CryptoKitties was dying, and it had been for some time.

The launch of CryptoKitties drove up the value of Ether and the number of transactions on its blockchain. Even as the game's transaction volume plummeted, the number of Ethereum transactions continued to rise, possibly because of the arrival of multiple copycat NFT games.

That perhaps unrealistic wish becomes impossible once the downward spiral begins. Players, feeling no other attachment to the game than growing an investment, quickly flee and don’t return.

Whereas some blockchain games have seemingly ignored the perils of CryptoKitties’ quick growth and long decline, others have learned from the strain it placed on the Ethereum network. Most blockchain games now use a sidechain, a blockchain that exists independently but connects to another, more prominent “parent” blockchain. The chains are connected by a bridge that facilitates the transfer of tokens between each chain. This prevents a rise in fees on the primary blockchain, as all game activity occurs on the sidechain.

Yet even this new strategy comes with problems, because sidechains are proving to be less secure than the parent blockchain. An attack on Ronin, the sidechain used by Axie Infinity, let the hackers get away with the equivalent of $600 million. Polygon, another sidechain often used by blockchain games, had to patch an exploit that put $850 million at risk and pay a bug bounty of $2 million to the hacker who spotted the issue. Players who own NFTs on a sidechain are now warily eyeing its security.

Remember Dragon

The cryptocurrency wallet that owns the near million dollar kitten Dragon now holds barely 30 dollars’ worth of ether and hasn’t traded in NFTs for years. Wallets are anonymous, so it’s possible the person behind the wallet moved on to another. Still, it’s hard not to see the wallet’s inactivity as a sign that, for Rabono, the fun didn’t last.

Whether blockchain games and NFTs shoot to the moon or fall to zero, Bladon remains proud of what CryptoKitties accomplished and hopeful it nudged the blockchain industry in a more approachable direction.

“Before CryptoKitties, if you were to say ‘blockchain,’ everyone would have assumed you’re talking about cryptocurrency,” says Bladon. “What I’m proudest of is that it was something genuinely novel. There was real technical innovation, and seemingly, a real culture impact.”

This article was corrected on 11 August 2022 to give the correct date of Bryce Bladon's departure from Dapper Labs.

This article appears in the September 2022 print issue as “The Spectacular Collapse of CryptoKitties.”

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