Editor’s note: This is a guest post by Steve Patterson and the opinions offered are those of the author alone.
Until recently, I’ve remained undecided about the DAO failure. Should Ethereum soft fork, hard fork or do nothing? I have a tentative conclusion: the best reaction is to do nothing. Let me explain why.
First, we have to lay out the facts. Ethereum and the DAO are two separate things. Ethereum is the underlying computer protocol, with its own unique blockchain. It exists for one purpose: to allow code to be executed across a gigantic network of computers.
The DAO is one of the first programs to run on the Ethereum network. “DAO” stands for “Decentralized Autonomous Organization” – it’s a new type of company, specifically designed to be run as an “autonomous organization.”
This is crucial:the DAO is a company. It’s a company without humans. That’s the point. No part of the DAO exists outside of the code. The company is the code. Investors can choose to fund the company by sending it money.
The DAO was not hacked. It simply executed its code, and by doing so, it went bankrupt. It was a bad business model. The DAO was only a failure