If you can’t understand how a cutting-edge new investment platform works, it’s probably a bad idea to put serious money (or a good portion of an infant cryptocurrency network) behind it. This is a lesson that backers and enthusiasts of the Ethereum platform and its pet project—a bot-run investment corporation known as The Decentralized Autonomous Organization (DAO)—had to learn the hard way recently.
This new “leaderless” investment corporation, which was purported to be “bound by code”—i.e. run by a bot—was supposed to operate as an automated crowdfunding and profit-sharing venture that obviated the need for human administration. Since its creation on April 30, it raised $150 million in investment on the trendy Ethereum smart-contract platform and plenty of positive press in the weeks leading up to its maiden IPO.
There was just one big problem: The code was broken, and The DAO got hacked.
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