Exploiting a programming vulnerability, a hacker this week appears to have stolen more than $50 million worth of Ether, a cyber currency that is an alternative to Bitcoin.

The vulnerability lies within the software of a private fund, or "decentralized autonomous organization" (DAO), made up of a pool of investors whose money is stored in a blockchain, the foundation of digital currencies.

This particular DAO was worth about $150 million, according to the New York Times, and the hacker moved the Ether he stole into a separate DAO. But the Etherum Foundation, which manages the Ether currency, froze the DAO, meaning the hacker can't touch the funds for several weeks.

The potential theft raised panic within the cyber currency community, despite Etherum's assurances that its underlying currency platform was not affected by the hack.

"This is one of the nightmare scenarios everyone was worried about: someone exploited a weakness in the code of the D.A.O. to empty out a large sum," Cornell computer science professor Emin Gun Sirer told the Times.

DAO's rely on so-called "smart contracts" to cut out the middleman in digital transactions. Using sensors, code, and predetermined deal workflows, they track every unit of digital currency—including Bitcoins and Ethers. They can trace how often the currency is traded and raise alerts if they detect suspicious activity.

The hacker, though, was apparently able to fool one or more smart contracts by exploiting a recursive calling vulnerability, which allowed him or her to steal Ether many times in a single transaction.

Although it affects a relatively obscure cyber currency, the potential financial impact of the vulnerability highlights the risks that companies face as they evaluate smart contracts to replace everything from financial transactions to digital rights management.