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Discussion around the issues outlined in the report have already begun (before the report was published) in the DAO forums. It's not unexpected that there will

Discussion around the issues outlined in the report have already begun (before the report was published) in the DAO forums. It's not unexpected that there will be problems. This has never been done before. But the fact that this report exists, the problems are being discussed, and there are already talks of proposals for resolving some of the issues is a good sign that the DAO is working as intended... The community discovers problems, the community fixes problems. Compare this to a traditional investment fund where you hand over your money to a private organization with opaque investment strategies, business operations, and technology. If I invest in a Vanguard or Fidelity fund, they only report back what is required of them by regulators. They take little to no input from investors, and may be running their business on decades old technology filled with flaws and bugs. I view the DAO as an open source investment fund in the same spirit as "The Cathedral and The Bazaar". It's not perfect, it's messy, some people are more influential than others, there's a lot of noise, and it could collapse on itself at any time. But everyone gets to participate (for better or worse). Lots of eyeballs are constantly watching, and plenty of concerns will be voiced. I know the HN crowd is a skeptical one, but try to keep an open mind. This could grow into something great. And if it doesn't... hey, it's not your money, so don't sweat it.

zekevermillion 10y ago
The "investors" risk losing all their money, and the curators and contractors risk going to prison because they are conducting an illegal securities offering with no valid exemption.
- HappyTypist 10y ago
  Curators may face legal risk, but contractors are just contracting. Nothing illegal about that.
  - zekevermillion 10y ago
    In many cases, like slock.it, they appear to be the same groups on all sides (curators, contractors, token-holders), but do not necessarily disclose the relationships or voting power.
- eloff 10y ago
  In a way, this is like Uber or Airbnb, you can't ask permission or you'd be out of business before you managed to change the laws. Asking forgiveness is not only easier than asking permission, sometimes it's the only viable route. They may lose money, they may make some. But it's a grand experiment of a kind that's never been tried before and I'm curious to see the results.
  - zekevermillion 10y ago
    Uber runs up against municipal taxi regulators. The DAO runs up against the SEC, DOJ, and state securities regulators, just to focus on the US cops. These people are a bit more serious than the City of Austin transit authority. As we've already seen in multiple cases, e.g., SatoshiDice, US regulators are aware of efforts to use profit-sharing contracts to raise funds, and view this (correctly) as a securities offering that should be registered unless there's a valid exemption. I was on a train some months ago and saw Preet Bharara reading the WSJ. At least I'm pretty sure it was him. How long do you think before a failed DAO crowdfunding ends up on the WSJ front page? If investors lose $100mm you can bet it will get that kind of publicity. Then it's just a matter of identifying the ideal defendant for symbolic punishment. If I were involved in slock.it, I would be careful not to travel through the US.
    - darawk 10y ago
      The DAO exists outside of the laws of the United States. If the US curators are arrested, they will be replaced with non-US residents. This is the fundamental premise of decentralized systems. They are resilient to the interventions of governments. Bitcoin is definitely illegal in many places in the world, and occupies something of a gray area in the US. Yet, it operates just fine.
      - bunkydoo 10y ago
        You've obviously never heard of extradition have you?
        10y ago
- eterpstra 10y ago
  yes, risk is risk. Anyone in the cryptocurrency space is well aware of the fact that tomorrow we could all wake up with a 0 balance. As for the legal aspect, the creators and curators have been assailed on all sides by critics and naysayers from the beginning, and yet they move forward. They either understand the risks, and deem it worthy, or are just plain stupid. Given the credentials of the individuals involved, I doubt it's the latter.
- statoshi 10y ago
  All investments carry risk. Thankfully, permissionless innovation platforms don't care what governments think. If it turns out that governments do try to ban DAOs, we'll just need to enhance their privacy.
- cloudjacker 10y ago
  That is an interesting thing to say, so because the DAO acts as one entity, one could easily rely on a Reg S + Reg D exemption to get around pesky US laws. Reg S because the dao would be a foreign entity, and Reg D because it would be a private placement with only one investor. So no disclosure laws necessary! And honestly nobody in the international community cares about other country's securities laws. You can copy and paste some small exemption text from bank's private placements, so something for the UK, Hong Kong, Japan to make it also exempt. The DAO itself relies on sanctioning from Switzerland just like Ethereum, so I'd say all the bases are covered, until it gets challenged. But individual liability for all parties is pretty mitigated from the threat of securities regulators.
- dev1n 10y ago
  Which prison do they go to?
davidgerard 10y ago
Did anyone discuss "even minor bug fixes that would be trivial in centralised code are near-infeasible in a DAO"?
encoderer 10y ago
Mutual funds are not hedge funds. They cannot just invest your money in anything.
binaryanomaly 10y ago
I absolutely agree with your argumentation. It is a very interesting construct that could be the future - or just a test ballon that disappears as fast as it rose. Personally I found it worth investing 100$ in such an interesting concept to participate and raise it's chances. If it turns out bad I loose a tiny bit of money and we all have learnt something. If it turns out good - awesome, curious to learn from it and see how it develops. PS: At least I can tell my grand-children to have participated at the biggest crowd-funding event so far ;)

zekevermillion 10y ago

The "investors" risk losing all their money, and the curators and contractors risk going to prison because they are conducting an illegal securities offering with no valid exemption.

HappyTypist 10y ago
Curators may face legal risk, but contractors are just contracting. Nothing illegal about that.
- zekevermillion 10y ago
  In many cases, like slock.it, they appear to be the same groups on all sides (curators, contractors, token-holders), but do not necessarily disclose the relationships or voting power.
eloff 10y ago
In a way, this is like Uber or Airbnb, you can't ask permission or you'd be out of business before you managed to change the laws. Asking forgiveness is not only easier than asking permission, sometimes it's the only viable route. They may lose money, they may make some. But it's a grand experiment of a kind that's never been tried before and I'm curious to see the results.
- zekevermillion 10y ago
  Uber runs up against municipal taxi regulators. The DAO runs up against the SEC, DOJ, and state securities regulators, just to focus on the US cops. These people are a bit more serious than the City of Austin transit authority. As we've already seen in multiple cases, e.g., SatoshiDice, US regulators are aware of efforts to use profit-sharing contracts to raise funds, and view this (correctly) as a securities offering that should be registered unless there's a valid exemption. I was on a train some months ago and saw Preet Bharara reading the WSJ. At least I'm pretty sure it was him. How long do you think before a failed DAO crowdfunding ends up on the WSJ front page? If investors lose $100mm you can bet it will get that kind of publicity. Then it's just a matter of identifying the ideal defendant for symbolic punishment. If I were involved in slock.it, I would be careful not to travel through the US.
  - darawk 10y ago
    The DAO exists outside of the laws of the United States. If the US curators are arrested, they will be replaced with non-US residents. This is the fundamental premise of decentralized systems. They are resilient to the interventions of governments. Bitcoin is definitely illegal in many places in the world, and occupies something of a gray area in the US. Yet, it operates just fine.
    - bunkydoo 10y ago
      You've obviously never heard of extradition have you?
      - 10y ago
eterpstra 10y ago
yes, risk is risk. Anyone in the cryptocurrency space is well aware of the fact that tomorrow we could all wake up with a 0 balance. As for the legal aspect, the creators and curators have been assailed on all sides by critics and naysayers from the beginning, and yet they move forward. They either understand the risks, and deem it worthy, or are just plain stupid. Given the credentials of the individuals involved, I doubt it's the latter.
statoshi 10y ago
All investments carry risk. Thankfully, permissionless innovation platforms don't care what governments think. If it turns out that governments do try to ban DAOs, we'll just need to enhance their privacy.
cloudjacker 10y ago
That is an interesting thing to say, so because the DAO acts as one entity, one could easily rely on a Reg S + Reg D exemption to get around pesky US laws. Reg S because the dao would be a foreign entity, and Reg D because it would be a private placement with only one investor. So no disclosure laws necessary! And honestly nobody in the international community cares about other country's securities laws. You can copy and paste some small exemption text from bank's private placements, so something for the UK, Hong Kong, Japan to make it also exempt. The DAO itself relies on sanctioning from Switzerland just like Ethereum, so I'd say all the bases are covered, until it gets challenged. But individual liability for all parties is pretty mitigated from the threat of securities regulators.
dev1n 10y ago
Which prison do they go to?

davidgerard 10y ago

Did anyone discuss "even minor bug fixes that would be trivial in centralised code are near-infeasible in a DAO"?

encoderer 10y ago

Mutual funds are not hedge funds. They cannot just invest your money in anything.

binaryanomaly 10y ago

I absolutely agree with your argumentation. It is a very interesting construct that could be the future - or just a test ballon that disappears as fast as it rose. Personally I found it worth investing 100$ in such an interesting concept to participate and raise it's chances. If it turns out bad I loose a tiny bit of money and we all have learnt something. If it turns out good - awesome, curious to learn from it and see how it develops. PS: At least I can tell my grand-children to have participated at the biggest crowd-funding event so far ;)