Some Thoughts On Ethereum and The DAO

As many (most, all?) of you know, last week The DAO, a large crowdfunding experiment based on the Ethereum blockchain, was hacked and something like $50mm of Ether was taken from The DAO. That Ether may end up being recovered due to a fork of Ethereum that was done in response to the hack. Much of this was covered in Nathaniel Popper’s post in the New York Times last friday.

I won’t say that I predicted this but I certainly saw something like it coming in my blog post on Experiment and Scandal that I wrote a month ago.

Ethereum is brand new technology. The smart contracts that can be built on Ethereum are an entirely new thing and we are just seeing what works and doesn’t work with this technology. It is safe to say that the contracts that The DAO wrote did not work. The DAO is a failed experiment that suffered from more than poorly written and ill conceived smart contracts. It also suffered from way too much money and hype being invested in it. I was thinking of The DAO when I wrote these words a month ago:

I find myself wishing we could keep the dollars invested and hype down when we do these massively public experiments

It is an open question about what impact the failure of The DAO will have the future of the Ethereum experiment. It certainly shows that pairing a public and open blockchain with a Turing complete programming language and a smart contracts system is a very ambitious and potentially very dangerous idea. The price of Ethereum in dollars has been halved as a result of The DAO failure and it is unclear if the bleeding is over on that price chart. There is a very well articulated debate on Hacker News right now about the future of the Ethereum experiment. If owning Bitcoin is like buying an IPO stock, owning Ethereum right now is like buying into a Series A round. Let’s just make sure we all understand that please.

My partner Albert who is way smarter about the technology here than I am wrote a post on his thoughts on this subject over the weekend. You will see that he and I see things pretty much the same way (shock!). He ends his post with this thought:

Blockchains and smart contracts are amazing new tools in our overall technological toolset. We have to learn how to deploy them to the best uses (many of which have yet to be invented). That will take failures. The DAO is not the first one (e.g., Mt. Gox) and won’t be the last one.

I could not have said it better.

#crypto#hacking finance

Comments (Archived):

  1. awaldstein

    Let me play devils advocate here built on my own self conscious ignorance of the topic.Why with such brilliance of creation is there such ignorance or guesswork in deployment that allows these public failures?On an overly simplified example it’s like testing a vaccine publicly in the market without testing in controlled ways first. Like deploying new chipsets that control rocket navigation without inventing the discipline of device physics to create simulation mathematics.Make me smarter if you care to. I don’t get this.

    1. fredwilson

      it is like testing a vaccine publicly without prior controlled testing. it’s a great analogy. the thing is nobody dies when The DAO fails. and the folks who built The DAO didn’t ask for $150mm of Ether to get invested in it. that happened when people went nuts over it (tulips anyone?).what would be good on the next experiment like The DAO is for the creators to limit anyone’s investment to $100 and the total capital to $500k. that’s smart.

      1. Rob Underwood

        To put it another way, maybe there are limits to “f*ck it, ship it.”

        1. awaldstein

          Fuck it, ship it is just a bullshit way to build a market. Irresponsible.Perplexing as I’m sure these companies have advisors and board members who of course know this and don’t drive a more measure and reasoned approach.Not throwing stones as for damn sure I’ve made errors in similar circumstances but this is an error at least from where I sit with what I know.

          1. Rob Underwood

            I agree. And while I don’t think this is what happened here, I can say from first hand experience it can be very hard to manage a team of developers all from a generation that has largely been told and taught (including and especially it seems by the bootcamps) that “f*ck it, ship it” is THE way things are done and anyone who insists on a modicum of testing is a square.Thankfully most good developers regardless of age sooner than later realize that putting out whatever shlock was in last night’s build into production isn’t the best idea, but I do worry there is generation of developers of whom there is at least a large minority who think “f*ck it ship it” is not only the most appropriate methodology in most cases but the only methodology.

          2. awaldstein

            Yup…done this long enough to know that from the outside I know that I know nothing.Easy and useless and a waste to be a gadfly critic.Overly conscious as what I do for a living is create market perception so very sensitive to this barometer in circumstances like this.

          3. Rob Underwood

            Well said.

          4. LE

            Well because it worked in the 80’s. And you can thank the PC clones and especially Microsoft for that thinking. [1] [2][1] As well as the overwhelming abundance at the time of early “stupid computer users” who thought it was them doing something wrong and not faulty hardware or software.[2] When I worked for a brief time in the early 90’s for a company in SV I remember being struck by the realization that our actual paying users with delivered product were our beta testers. And the VP of Sales refused to acknowledge defects in the product and he took it as almost idiotic the suggestion that we print a list of issues that needed to be avoided to accompany the hardware.

      2. awaldstein

        Thanks Fred.I’m not a fan of throwing shit at the wall to see if it sticks as a deployment methodology. This to me is often a misunderstanding of iterative market building often by tech driven companies.With block chain there seems to be a lot more friction in deployment than there needs to be.

      3. LE

        it is like testing a vaccine publicly without prior controlled testingIn vaccine testing (and rocket launching) adults working for public or private companies are in charge. Those parties stand to loose personally if something doesn’t go as planned.

      4. Twain Twain

        For me, THIS was the most important bit in what Albert wrote: “And there is huge value in any system from ultimate reversibility. In fact we should be deeply careful with anything that is not reversible.”Reversibility directly relates to Turing-completeness and its issues of immutability, i.e. inability to reverse calculate once the forward calculation has been run.There’s a good Reddit on why smart contracts can’t be written for TC here:*…Turing-completeness and the halting function is also something AI people think about — in case the machines go haywire on the forward propagation but the reverse algorithm paths (back prop) can’t get us back to safe start.In other words, as we go further down one path after another of the Merkle or Bayesian tree, the algorithm may not know how to loop back to root and the exact same nodes it previously went through (and do it quickly enough to counterbalance all the losses still running through on the forward props).It’s partly the reason the derivative contracts in the mortgage CDO crisis of 2007/8 happened the way they did and caused such huge value losses.It’s a seriously big structural problem in algorithm design — which is why my position is that we stop using logic trees with huge spans and instead design it along the lines of a sphere (and there’s now some Quantum Physics research to support my position).Anyway, at DevCon in London in Nov, I’d had a conversation with some of the engineers (including the Slock.It team who got quoted in Popper’s piece) and asked them why there was no time delivery expectation codes in the smart contracts.In this way, the .value() function that DAO uses, which forwards all the available gas, could be time-staged in much the same way that a revolving credit facility works.You can’t send or receive the next load of ether until that other part of the task and proof point is completed on both sides.That to me was what really stood out as missing when the Consensys & other Ethereum folks presented the code and process of the smart contracts.Quite apart from the TC issues.@wmoug:disqus

      5. PhilipSugar

        That was a great call a month ago. You are right if $500k was invested their would be much less damage.

    2. LIAD

      i think there’s a far simpler analogy.its just rolling out buggy code.the kicker though is this code when exploited steals hard cash and there’s no safety net/rollback mechanism to make things good once you realise things have gone to shit.

      1. Rob Underwood

        Right. And to riff on a couple comments below, it’s the continued perversion of iterative development – coupled with more than a little sense of hubris and privilege in the name of changing the world – that has led us from one extreme (long, redundant test and re-test cycles common in waterfall methodologies) to another extreme whereby untested code gets thrown into production and the entire world is viewed as one giant petri dish. For iPhone games and social networks, maybe the approach of putting largely untested code out there is ok (or maybe it’s not), but when it comes to financial transactions, perhaps smaller batch toe dipping (e.g., Fred’s $100 investment cap idea below) is a better course.

    3. William Mougayar

      read my latest post 🙂

      1. awaldstein

        Too long for me my friend!I’ve cued it up alongside of books for my next flight.

    4. Michael Elling

      The same was said about IP. Only IP solved a much bigger interoperability problem early on and created enormous network effect and demand pull-through. That is coming to an end, and the lessens learned in the first 100 years of information networks is catching up. Can’t hide from immutable truths.

  2. LIAD

    the utopian promise of money as code is a double edged sword. code is buggy and exploitable just like most other things in this world.the overarching breakthrough of cryptocurrencies were decentralised immutability. i worry that violating core principles in the name of ‘too big to fail’ – puts crypto and fiat on the same vector, effectively defanging cryptos fundamental Ethereum hard fork to save The Dao is the same as a Central Bank/Govt printing cash to prop up a failing bank. N’est pas?

    1. fredwilson

      good question. albert addressed irreversability in his post

    2. William Mougayar

      it’s more complicated than that.we are still learning and maturing the technology, so exceptions could be made to fix things.

      1. Lawrence Brass

        Restart the DAO on a new instance, replay good transactions, just as good ole’ database recovery does. A matrix movie déjà vu moment.And fix the hole of course.I think these a just setbacks, perfectly surmountable, it may even help to shave some hype fat off.

    3. Sebastian Wain

      > the overarching breakthrough of cryptocurrencies were decentralised immutability.But that was an utopia since power is at stake here. When protocols can change there is no immutability and even when some few actors/stakeholders (e.g. miners, core developers) don’t want to change there is no decentralised immutability because the decision is centralised.

    4. jason wright

      ‘In Fork We Trust’ – no.

    5. andyswan

      Yes… they just invented the central bank for crypto. It’s comical

  3. Glyn MacLean

    I have posted an article on the same here. I have a different perspective. As an early investor in DAO and Ethereum and expert in accounting technology.

    1. Rob Underwood

      Can you sum up your points here so the discussion isn’t forked between here and LinkedIn?

      1. Glyn MacLean

        On the bright side- 100% of the value was caught and quarantined immediately. – There was never any chance that the value could be withdrawn. – 100% of the value will be routed back to rightful owners- Global exchange shut down occurred simultaneously. – The temporary drop in ethereum rate means that there is no Eth or DAO bubble! – The low rate is a good time to buy, if you believe that the value will increase.On the dark side- There is some work to do on DAO protocols.- With hacks comes restriction of freedoms.- This has impacted trust and value.

    2. William Mougayar

      I like your Bright side bullets. you’re right!

  4. Tom Labus

    The response was like a philosophical debate rather than a desire to get the money back. The supposed hacker is debating whether it’s his cash since the code let him grab it. At some point do they want the code to fix itself and make decisions without any human interference? It seems implied in the debate.

  5. pointsnfigures

    The worst thing is the people already against cryptocurrency will be hardened against the idea of cryptocurrency

    1. jason wright

      and well architectured blockchains will be tarred with the same brush. alt coins are down in price, but therein lies the flip side opportunity of this debacle.

  6. Mario Cantin

    ‘That will take failures. The DAO is not the first one (e.g., Mt. Gox) and won’t be the last one.”In other words, as the popular adage goes, you can’t make an omelette without breaking some eggs….

  7. William Mougayar

    Incidentally, I just published a 2,700 word analysis on the same subject. http://startupmanagement.or…I had warned twice publicly about the risks of the DAO as it was conceived and funded. You don’t need $200M to do an experiment. $10M would have sufficed with caps on everything.What we have just witnessed is a mini version of the Carlota Perez paradigm shift principle in action: the overshooting that follows the installation phase, but precedes the deployment stage. The DAO overshot their exuberance. The hacker overshot their zeal. The rest of the community will benefit from further deployments of Ethereum and decentralized technologies, once we can close this chapter, and apply the learned lessons from it.

    1. awaldstein

      That’s 2000 words to long for me my friend ;)I can’t think of anything on the planet, including our political situation in the country that requires that much complication to drive me to be knowledgeable or interested.I’m the exception I know. I accept that,Size is a detriment for my simple brain in most circumstance when it comes to blog post!

      1. William Mougayar

        It’s a complicated situation. Given my position, I need to be thorough in explaining things.

        1. awaldstein

          So you would not be willing to go on the air and speak for 3 minutes on what happened?

          1. William Mougayar

            sure I would. i’m summarizing it all the time, tomorrow in one of the talks for eg, and on twitter.

          2. awaldstein

            3 minutes is way less than 2700 words.Missing the logic my friend.

        2. andyswan

          Bitcoin’s adoption problems explained in 15 words.

      2. Jess Bachman

        So you’re saying……… he should write a book?

        1. awaldstein

          Ha!I like his book a great deal and use it as a reference.I trust him as an expert but I want opinions which are not the same as explanations.

    2. Muneeb Ali

      Totally agree with William that there should’ve been hard caps on the amount of money for an experiment like the DAO.

    3. Kirsten Lambertsen

      http://www.wright-brothers….”The aftermath of the crash in which Orville was injured and Lt. Selfridge killed.”

      1. Lawrence Brass

        Almost 11 decades from that day, September 17, 1908. What is a decade? Ten years ago, it is a little piece of life, a career or a sigh. Maybe a little pair of eyes looking up at you, that a decade ago were not.Just 11 decades, and you can ponder about the Wrights sitting in a Boeing or an Airbus flying at 950 km/h. Amazing.

  8. Sebastian Wain

    The launching of the DAO was negligence. I think almost everyone working with Ethereum behind the scenes knew that smart contracts require deep security reviews and tools.But I don’t see Ethereum doomed, this is just a break. The ideas behind Ethereum are solid and it is better prepared for private blockchains than Bitcoin.

  9. Julian

    Just before reading this I read a headline in a Dutch newspaper saying that “trust in this type of technology is diminishing”.That reminded me of something Sam Altman said a while ago which resonated with me:Bad investors ask about market size.Good investors ask about market growth rates.Great investors believe new markets will get created.Then I read this post. Glad to see you’re feeling the same way about mishaps.

  10. Dana Hoffer

    Isn’t there a OneName comment needed here? Yes, a hack on DAO and they must have erred, but isn’t there an identity registration piece to this? Maybe in another post in the near future?

    1. Michael Elling

      Add to that the fact that the “internet stack” has no inter-actor (inter-network) settlements that provide necessary price signals serving as incentives and disincentives for greater ecosystem network effect. The result is silos and ossification. IPv6 taking 3 decades to become ubiquitous, etc…

  11. Hu Man

    Teenagers have been given the keys to the Maserati. Our entire concept of value is in question. At least we can burn paper for heat. And it’s not terrible with a little oil and vinegar.

  12. sigmaalgebra

    “Measure twice, saw once.”Have some proofs of correctness.

  13. Lawrence Brass

    Most security breaches can be tracked and linked to code defects, most code defects can be usually tracked and linked to process defects. Coding is still error prone mainly due to its hand made and crafty nature. But there are engineering disciplines and proper QA and post mortem analysis that can be used to mitigate problems before and after they happen. Of course and to be honest, when was the last time you saw these properly applied? We are getting lazy.Maybe this has something to do with one of Alan Kay’s replies to a question yesterday. He is in AMA (ask me anything) mode at hacker news. (… )Quoting Alan Kay, yesterday:”It used to be the case that people were admonished to “not re-invent the wheel”. We now live in an age that spends a lot of time “reinventing the flat tire!”The flat tires come from the reinventors often not being in the same league as the original inventors. This is a symptom of a “pop culture” where identity and participation are much more important than progress…”

  14. bogorad

    It’s telling that most people here agree on terminology (‘hacked’/’stolen’) and consequently on resolution (hard/soft fork, reimbursement). But why should ‘old world’ paradigm be applied here?! I am absolutely open to what the other side is communicating – the contract _is_ the code, anything else is just talk. An irresponsible team used unproven platform and created badly thought-through code. Now the fun begins – the ‘attacker’ suggests to give miners what is effectively a bribe against a possible fork. Can’t wait to see what happens.

  15. jason wright

    Ethereum’s first live release was called ‘Frontier’. That it is.The Lament for Icarus, and yet today we fly everywhere;

  16. andyswan

    Meanwhile VISA processed $100,000 in transactions every second yesterday, without losing $50m.For the past years, I’ve been wondering aloud if crypto-currency people were solving a problem that didn’t exist. We have a digital currency, it’s called the dollar. I’ll admit I don’t understand the supposed value of the “block chain”, which to me looks like a basic double ledger system that everyone in the modern era already implements a version of. Except this one is a permanent, anonymous transaction history—except when it’s not because a hacker who we have identified yanked the funds from everyone so now we reverse it all with a vote?Get it together, nerds.Up next: Transaction fees to help insure users against bad transactions! Central planning committees to help determine “bad” price movements and liquidity measures! Rewards systems for most active users!

    1. jason wright

      come now. credit card companies lose millions to card fraud every week, which is hacking that system by another newly issued card turned up in a shop in Egypt!

      1. andyswan

        Correct…around $0.0006 per $1 transacted through the network, of which a vast majority of is non-technical in nature.No system is flawless… at least my CC company has my back when something goes wrong and doesn’t have to reverse their entire transaction history to make it right.

        1. agraham999

          Not to mention there is a trust mechanism in that I, as a consumer, can reverse a transaction. I have insurance on purchases. Etc. Etc.

      2. LE

        credit card companies lose millions to card fraud every weekActually the loss is on merchants. Any issues with the payment come directly out of the merchants pocket generally. They even charge a fee to the merchant in addition to the chargeback just for processing the paperwork on fraud transactions.

    2. William Mougayar

      SWIFT lost $81M and $12M. you heard about that?Ethereum is not VISA. they are less than a year old.

    3. LE

      Up next: Transaction fees to help insure users against bad transactions!True. Now let’s take email deliver-ability. All email is created equal and free? Sure. But some providers (inbound email) decide that it’s helpful for a mailer to have a middleman (such as sendgrid) do the SMTP. They get paid to determine whether mail is worth or not of getting in the inbox.

    4. LE

      Meanwhile VISA processed $100,000 in transactions every second yesterdayWhere did you get that number from? Maybe you mean $10k per second?From this page it says they do 150m transactions per day. That is 173 transactions per second. (150000000/24/60/60). [1]…$100k/173 = $578 per transaction which would mean there was a large proportion of very large credit card transactions. Even if the 150m figure is old it’s not that old. It’s obvious most transactions are well under this number. Link [2] found after my gut feeling fwiw.[1]…[2] http://money.stackexchange….

  17. aminTorres

    Is there or could there be a decentralized theft insurance on the Ethereum blockchain?Perhaps this goes against the very nature but perhaps there is room for some form of insurance service, tools, SDK or something that is maintained independently.A small fractional fee attached to each transaction. This grows overtime to cover loses like this one and to developed future security measures? Apologies if this is a silly comment as I have very limited understanding on the subject.

    1. andyswan

      Of course you’re right. Amex and Visa just beat them to the idea by decades….

  18. jason wright

    and Craig Wright’s attempt to patent troll aspects of blockchain tech is unhelpful. i thought he was up to no good when claiming to be Nakamoto.

  19. sigmaalgebra

    I’ve tried really hard to ignore blockchain details and, so far, have been nearly fully successful.But, from what little understanding did leak in, it looks like blockchain, etc. are heavily into some cryptography and related topics.The day I started to take Rivest-Shamir-Adleman (RSA) cryptography seriously was when someone, maybe B. Schneier, claimed that cracking RSA was equivalent to factoring a large, positive,whole number into a product of primes. Okay. I can take that challenge seriously.Seriously? Sure, I can believe that the NSA, CIA, etc. would just love to be able to do such factoring. But so would a significant fraction of all the research pure mathematicians in the best research universities in the world, and as soon as they were successful they would publish and win, say, an Abel Prize, and I would have heard about it. Since I haven’t heard, I have to believe that those mathematicians haven’t done it yet. And since I rate the NSA, CIA, etc. several steps down from those university mathematicians, I have to believe that the NSA, CIA, etc. haven’t done it yet either. So, so far, RSA with long keys should be safe.Yes, suppose such a university mathematician had a solution. Might it be that the NSA, etc. would classify the work and stop the publication? Assume so: But likely the work, the final result on fast factoring, would stand on a lot of striking, original prerequisite work, and likely that work would be covered in the prof’s advanced classes on number theory, the prof’s seminars, or the work of the prof’s grad students. Then, just the prerequisite work would leak out and, quickly, be seen as a likely path to fast factoring. Then soon we would have the fast factoring work from some other mathematicians, in the US, Canada, England, Germany, France, Russia, China, etc.So, net, first cut, I have to regard RSA as safe cryptography.Is such factoring in NP-complete? Would an algorithm that shows that P = NP provide a polynomial algorithm for such factoring? If I were to take RSA more seriously, I’d want to know, have proofs, and work through the proofs.Sorry, guys, but mathematical proofs are by a wide margin the highest quality information we have in our civilization. The level of correctness, precision, and quality, e.g.. Bourbaki, are maybe even absolute and are wide margins beyond anything else in civilization.When exposing to the public some system for cryptography and handling big bucks, we very, VERY much should want the mathematical proofs.Sorry, guys, in that context, the process of software design, software walk-throughs, alpha test, beta test, roll it out to the public, version 1.0, patches, version 2.0, etc. that can work for, say, Facebook, just ain’t nearly good enough. Instead, we need the proofs, that is, the fully careful, fully correct, thoroughly reviewed mathematical proofs, as in mathematics, as in the work of the famous full profs in a high end pure math department in a world-class research university. E.g., just start with Princeton or as close as possible.So, in particular, for the blockchain, again I’d want the mathematical proofs, and to check them, myself. And I’d want the proofs in some peer-reviewed papers in some quite serious journals where I can believe the reviewers knew very well how to check proofs and did that.Then, I’d want to know that any associated software was similarly correct. Then maybe I’d invest 10 cents.We’re talking mathematics here, guys, not some silly, mumble, fumble bumble, fool around, mostly silly talk, junior high hacker culture field like, upchuck, *computer science*, not even at MIT or Stanford.

  20. JLM

    .In the continuum of crawl, walk, run, people need to master crawl.This was inadvisable for so many reasons. It is adolescent leadership.JLMwww.themusingsofthebigredca…

    1. Tom Labus

      Let’s see if they get the money back. It’s not a done deal and some of them may agree with the hacker

  21. David Jefferys

    Bitcoin caught my attention in the fall of 2013 as the price began to rise and I spent all my free time learning about the technology and different projects in the space. I started the Bitcoin meetup group in Buffalo, NY which gained steam through 2014 but has since died off quiet a bit.Towards the end of 2014, I stopped paying attention to the space almost completely…. until an acquaintance recently started the Ethereum meetup group in Buffalo where I learned about The DAO crowd-sale. My interest in the crypto space has since been reignited and I’ve got a feeling that I’m not alone… I’m sure there are others who have followed this similar enthusiasm/participation trend which interestingly seems to correlate with the price of BTC.It’s been fascinating returning to the space after some time away… seeing who and what projects are still around, the promises that have been made and the promises that have been broken… but it still feels like the early days in this.

  22. Muneeb Ali

    There seems to be a misconception that this is a case of app developers writing a bad app on top of a secure platform. The DAO had its own issues, but the exploits that were used to steal money are problems with Ethereum. More specifically exploits in the JavaScript-like language that Ethereum uses for writing apps (called Solidity).They apply to all apps/contracts written on Ethereum and not just the DAO. This is a much deeper problem. We’ve written about it in more detail at

    1. William Mougayar

      I might correct what you are saying- it’s a problem with some smart contracts depending on how they are written. It would be too general to say that it’s a problem with Ethereum, implying Ethereum as a whole.Vitalik has described these bugs and they are working on them.

      1. Muneeb Ali

        William, please read my latest blog post. There are undocumented security exploits in Solidity that are *just* getting discovered and they impact all deployed contracts not just the DAO.I’m not saying that Solidity/Ethereum is to blame. These are obscure exploits and Ethereum devs are far more professional than the DAO crowd. However, it’s a fact that the discovered vulnerabilities apply to all contracts and not just the DAO and is a more fundamental issue.

      2. Lawrence Brass

        Please correct me, but as I far as I have read it seems to be a problem arising from the Ethereum Solidity language behaving in a non-transactional manner or enabling non-transactional programs or ‘contracts’ to be written and executed. So it is a problem with Ethereum’s actual implementation, a design flaw more than a bug in my opinion.

  23. TaylorMiles

    Too much Drama. This is all very exciting to me, and these types of setbacks are natural in a space that is pushing the boundaries of tech, law, and community to the limmits. So easy to armchair quarterback after something like this happens. Yes mistakes were made, and this is the foundation for learning, and improving on the network. This is not the end for Ethereum, or even the concept of a DAO. If not for those out there to take risks, and break things we would not live in the world we do now. After all the drama is done, I think we will all be able to look back at this and laugh.

  24. guest1234

    IF THE DAO IS A PLANET, THEN WALL STREET IS THE MILKY WAY. In 2008, in 2001, the public LOST BILLIONS. Again and again, people invest their money, just to find out that it pops, disappear. We don’t call it “bugs” or “new technology” but rather a “financial crisis”, a “bubble”. But the effect is the same. However, when the government faces “a financial crisis” it never does what the DAO guys did: take the money from those who sold the stocks at high price and return it to the poor buyers. NO. If DAO was the stock exchange, the government would return the money from tax payers.

  25. Kirsten Lambertsen

    Either here or over at Continuations, someone had shared a video of an interview with one of The DAO’s creators (before the incident). I watched it at the time, and based upon that interview alone, I’m not surprised by this at all. I thought at the time that it seemed ripe for calamity.…Green appears swept up in the exuberance that drove the unbelievable amount invested in The DAO.IIRC, he makes a comment at some point about why they didn’t put a ceiling on it. Of course, hindsight is 20/20 vision.

    1. Girish Mehta

      Thanks for sharing…hadn’t seen.

      1. Kirsten Lambertsen

        Would be curious to learn how it strikes you. (Although it’ll be hard now that the shizzle has hit the fazizzle to not view it skeptically.)

  26. Kirsten Lambertsen

    This kind of app is where I think blockchain is going to gain traction

  27. agraham999

    I work in a space that has been pummeled with blockchain and smart contract hype for the past year and while we use some pretty heavy crypto ourselves, I’ve expressed the need to caution because there is no such thing as just “simplifying the music industry”.Now in the past 12 months, Ethereum, VCs, media, and the echo chamber of the converted have been pushing and selling hard on immutability, autonomy, trust, zero fraud…and on and on. THE FUTURE!Shit, their own website…first paragraph:”Build unstoppable applicationsEthereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.”If anything, none of this is now true…and if line number one is intended to be true, everyone should be terrified.Adding to this, it isn’t so much some alpha project failed, but they built all this shit up as if it were ready for prime time, loaded it up to the gills with cash, failed spectacularly, and then had zero character when it came to responding to the crisis. Some founders tweeted happy tweets about new projects, some pointed fingers of blame, and some stayed silent.I can tell you confidently that anyone in the music industry who was on the fence about blockchain or smart contracts just fell off the fence…as they look at the DAO and think…what if that were our royalties?What this does is not simply question the need for this technology, but the way it was packaged and sold and the need for good ol humans and grown ups to step in.I’ll also just add that the reason I’ve cautioned people from jumping in is because as a tech person who was granted access behind the curtain and has seen the data…I can tell you you ain’t gonna solve the issues of the music biz with one or two smart contracts. Many of the complexities are human issues that have nothing to do with code and code can’t fix.Right now VCs are bored because all the unicorns are doing their unicorn shit which is not going public or soon to be crashing. So VCs need a new hype machine to park their cash…for new returns on exits…BLOCKCHAIN!!! So of course they will be the first to get in the apologist line.If any of this is to work it requires a slow and patient development and testing phase. These people should study and know the markets they want to change and also stop being so glib with their “Code is Law” shit that now is about to bite them in the ass in court. Also hire some lawyers and PR people.

    1. Preston Byrne

      This is absolutely correct – blockchain apps aren’t like “Yo” where you start with something small and then gradually add features and build up, they’re process automation tools where you start with something complex (that existing tech cannot do) and have to get it right on the first time at-bat.Indeed it is more important to get it right – both the commercial bits and the coding -than is is to just ship it.I wrote my own DAO postmortem (link follows) which sets this out in more detail. As a lawyer, “Code is Law” is total nonsense. Code is code. If you can marry it up with some legal obligations, great, but you’d better take the time to make sure it says what you want it to say.

  28. Preston Byrne

    Agree completely. From a purely technical perspective, both Bitcoin Core and Ethereum’s developers will tell you (when asked) that their respective software suites are in public beta testing.This differs substantially from what we usually see in technology investment: where the business model of a firm deploying a technology matters most, and rollercoaster speculation doesn’t happen.The former of these investment approaches occurs over a ten-year time horizon and is highly illiquid; the latter (cryptocurrency) is highly liquid and can be day-traded on the day the business first opens its doors.This is, I suspect, the direct cause of the hype with these public experiments: all of their participants are incentivised to drive it.

  29. JLM

    .Any business only has a single opportunity to make a first impression.OK, two chances.OK, three chances.OK, four chances — but that’s all!No, the public perception is a big problem and unless there is something — a killer app — this turkey is just about done.That is not a commentary about its tech wizardry but, rather, a comment about its perception.Meanwhile, all of the systems that the blockchain is supposed to make better are working just fine — for me.Turns out I like responsible middlemen who can make stuff work right the first time. Who knew?JLMwww.themusingsofthebigredca…

  30. LE

    You worked hard for what you have and you don’t want to loose it. You know that as one gets older you end up having less tolerance for things not working and having to clean up the mess of others who don’t do their jobs correctly or sell you shoddy goods. Or companies that hide behind CSR’s that sit in cubicles.I am wavering on Donald btw.

  31. Salt Shaker

    Crypto is currently a bit like Cryptonite. It’s radioactive. Managing brand perception for any new product or service is a challenge, but it is especially so when it comes to money mgt and taking on well entrenched legacy businesses (e.g., banks/CC companies). Unlike the restaurant or hospitality biz, for example, consumers won’t give fin biz a 2nd or 3rd chance, let alone a 1st chance if there are serious perceptual probs, irrespective if warranted or not. There’s a reason why fin service companies test the shit out of new products before rollout.Just last week my AMX card got hacked. I immediately got two alert notifications and a phone call from AMX raising questionable charges. 2 fraudulent charges totaling $600. Within 24 hrs temporary postings were deleted, new card received and I got great customer service to boot. Even though I was hacked (impossible to insulate 100%) my confidence in AMX’s ability to manage my account increased twofold. And I’m gonna abandon all this why?

  32. awaldstein

    Question for you my friend.There are people on this string who are on the boards of these companies (we know who these are) and by definition have fiduciary responsibility to the shareholders–correct?Why are they not liable or responsible to the public for what appears from the outside as such blatent mismanagment.Excuse if the words are not technically correct but you know what i am asking and I think an interesting topic.Thanks!

  33. JLM

    .Everybody is wavering on Donald Trump including Donald Trump.He can’t win the nomination.He can’t win the election.Hillary Clinton will whip him like a red headed stepchild with a lisp.He’ll never be President.Meanwhile, he keeps making a lot of good moves. Reeeeeepackaging and realigning and bringing on seasoned campaign operatives.This doesn’t even become a thing until Labor Day. Everyone is going to get a bounce from their conventions and then it’s game on. It’s going to be a long, hot summer — which means nothing.Stay sharp, we’re not even in the starting gates yet.BTW, the Cleveland Cavaliers never had a chance cause nobody — NOBODY — ever came back from 3-1, right?JLMwww.themusingsofthebigredca…

  34. Salt Shaker

    “Waver”? You’re way too smart to be drinking that Kook-Aid long term.DJT is digging a lot of ditches. Prob is there’s no place for all the displaced dirt.

  35. cavepainting

    Happy that you are wavering. You may be getting closer to the truth.He makes some good points but the temperament question is a big one. For me, his motive gives pause. Seems more driven by his ego and narcissism than by any genuine desire to help people and the country.

  36. LE

    The words that come out of his mouth don’t bother me that much. The shit that other people were bothered by I don’t care about. The judge, all of that a who cares for me. Of course the judge would be biased that’s obvious. [1] I am just picking up on to many displays of mental instability. I think this stems from a lack of sleep and the pace that he is going at. [2] I think his brain is starved for oxygen and his judgement is impaired. That is why is behavior is so exaggerated from what it was to begin with. If you’ve ever had friends with mental conditions you are familiar with this. I saw this same behavior in him when he rolled out Trump University actually. I thought at that time he was losing it or had some condition that caused him to act the way that he did at the time. I remember thinking that at the time that “Trump has lost it this is a sham”. I called it before anyone even knew it.[1] What’s funny is that Trump has setup a perfect scenario for the judge to be extra careful now to not be biased. It’s like the OJ case and why the prosecution allowed so many black jurors. To me that is the move he made. And he is so into winning he doesn’t care about any scorched earth.[2] As you know when you are in business even if you are hard driving you make all of the calls about your schedule and what and where you are. As a candidate that is not the case. You have to be visible all of the time just to not make people think there is something wrong. That’s tremendous pressure. Now of course he enjoys all of this but that doesn’t mean it doesn’t take a toll on him.

  37. Lawrence Brass

    From afar I already saw the inflection point, I think that he already burned all that he had, mostly xenophobic and nationalistic bs that part of the general public can easily relate to. The problem is that passion is a moment, an explosion, it does not stick.No vision, good strategy and bad tactics in my opinion. I thought he would play the amicable partner with the GOP, remember? And he didn’t, he didn’t negotiate. And not doing so shows he is not that smart, maybe witty but completely lacks emotional intelligence and empathy skills.On the other front, from Hillary’s victory speech onwards, I have only seen perfect execution and alignment. Clinton-Obama-Sanders is what Trump will have to face now, that is if he survives the GOP. Tough. I admire he doesn’t break, but the cracks are evident.So now, if the UK decides to stay in the EU, risk alert will return to normal and the forecast for 2017 will be sunny again.And speaking of tough ordeals, tonight the US men’s soccer team defends the right to be in the Copa America final against Argentina in Houston.

  38. LE

    See my reply to JLM below.

  39. JLM

    .I will pull the starboard oar if you will tug on the port one.We are in the same boat.The service I get from USAA is beyond my wildest expectations. There is not a measure of happiness which exceeds my current status.JLMwww.themusingsofthebigredca…

  40. JLM

    .You may be overanalyzing the phenomenon DJT just a bit.Again, nothing counts until September. Between now and September there will be a lot of testing as to what does and does not work.I see none of what you describe. Not meaning it is not real, I just don’t see it. I see a guy slowly but surely tightening his operation and gearing up for the main event.I also notice that no two journalists can gather without talking Trump. That is money in the bank and will continue to be.Remember, he can’t win and the Cavaliers can’t either.People seem to have forgotten what happened in 2014. That has not gone away. The Republicans ran the freakin’ table after the President said, “My policies are on the ballot.”Forgetting about the names of the candidates and just looking at the underlying stats, wow, Trump is in a much better position than Reagan.Don’t be fooled by “unfavorables.” Unfavorables are not determinant of voting. I can still have an unfavorable view of Mr. X and vote for him. Happens all the time.JLMwww.themusingsofthebigredca…

  41. LE

    You may be overanalyzing the phenomenon DJT just a bit.No not at all. You know Fred is in the habit of saying something similar when I suggest that he has some ulterior motive, but Trump being the type of person that he is, well, I give it a chance that I am on target with my thinking.By the way I am not saying anything regarding whether he can win or not, just my concern with his behavior and why I think it’s happening. And again the concern is not how he pushes the limit with things he says but rather other things I am picking up in his behavior that are setting off my concern.The press had a field day with Corey and how they thought it was weird that he didn’t freak out when fired. That shows how much they know about how bright Corey’s future can be now as a result of being fired. By the way I think one reason Trump liked Corey so much is that he reminded him of Roy Cohn a bit.

  42. Salt Shaker

    Sorry, this is a house of cards and someone’s tugging awfully hard on that Joker card at the bottom of the pile.Perception is shifting in a big way here. The guy can’t get out of his own way. In the last 7 days alone Trump has said if club members in Orlando were armed there’d be a diff outcome, until someone whispered in his ear, “Yo Donald, drinking and guns, not such a good idea.” And then he flopped by saying he meant if the guards were armed, which they were. On Sunday he literally advocated a need for racial profiling, which I’m sure will resonate quite strongly w/ any and all minorities, not just Muslims.This no longer is about whether Hillary is a better choice, it has (or will shortly) become more of a referendum on what this guy truly is—a bigot, a racist, a shaman, a charlatan–irrespective of the candidate he is running against.There is no way the GOP comes together at Cleveland, even w/ speculation that Trump won’t last that long, which, of course, he will. Not everyone in the GOP is operating like party first lemmings, and more will soon follow.

  43. cavepainting

    JLM, Do you really believe that Trump’s heart is in the right place ? That he wants this job to get the country to a better place ? That he wants people to have better lives ?Or is this all about him and his ego ?Disagreeing with Hillary is not a reason to vote for Trump. For me, the disqualifying thing about him is he seems unwilling to learn about issues and understand that there are many sides to a story.Would love to understand why someone as smart and as perceptive as yourself see it differently.

  44. LE

    Seems more driven by his ego and narcissism than by any genuine desire to help people and the country.Well first what politician isn’t driven by ego or narcissism?But even if that is the case all I care about is if someone can get “the job” done. That is all that matters to me. The reason they are doing the job is really of no interest to me. Now if you want to argue that someone who cares about the country will do a better job that’s fine but I don’t buy into that personally.By the way if all politicians cared about was the desire to help people, and the country, they wouldn’t be concerned with their “legacy” which has no impact at all on the country. I could even argue as well on how they make decisions which boil down to “if I do this I won’t get re-elected” and well as keeping all sorts of people happy. You see everyone acts in their own self interest typically. You know the optics of everything and all of that bullshit that is politics.

  45. cavepainting

    That is true. But.. the kernel of why you want to be president needs to be not driven by self interest. May be I am a fool, but if you are not genuinely driven by empathy for the ones who need help and doing good for a greater cause beyond yourself, you are likely to optimize for the wrong things.

  46. LE

    By the textbook definition of a racist Trump is actually not a racist. That is just a word bandied about without regard for the truth.a belief that race is the primary determinant of human traits and capacities and that racial differences produce an inherent superiority of a particular raceThere is a difference between being a racist and not being able to say anything at all about a particular race or type of people unless, of course you are a member of that group. If that is the case you can slam all you want, for some reason.Trump made comments about jews begin good at negotiation. Which he meant as a compliment. And for sure it was a broad stroke. I’ve met non-jews that were good at it as well (like Trump). However even though some jews were offended by this, plenty more sat back and said “yeah we are pains in the ass about money and things like that”. You see that is what the people that support Trump are reacting to. This need to always walk on eggshells about anyone who isn’t a WASP. (Remember those?)

  47. JLM

    .Come on, you’re failing history. The political parties always come together. The guys who are hanging out are the Old Guard, the GOPe. They are dinosaurs. They are extinct, just waiting for their autopsies to be scheduled.Trump brought Republican primary voters out of the woodwork.Trump has the voters while the GOPe has each other. Nothing else.Trump was not really running, remember?He was constantly one gaffe from the end.He could never win the primary.Even toward the end, Cruz and Kasich were going to team up and knock him off.Romney and the Bushes came out against him.He could never win the primary?HE WON THE PRIMARY IN A CAKE WALK. Made it look easy.There has never been anybody the pundit class/MSM/GOPe has been so wrong about as Trump.He’s going to do fine.He should be down by 20% in he polls (Reagan starting gate numbers). He is even.President Trump — may become a thing.JLMwww.themusingsofthebigredca…

  48. LE

    Look my Dad wouldn’t have given two shits about whether Richard Nixon actually cared about Israel or not. Just that he was good for Israel. And about Watergate “they all cheat he just got caught”.You know when my Dad was in the concentration camp (buchenwald) he saw how people really are when it comes down to their own self interest vs. you. And what they say before that really meant nothing at all. Words (for a politician) are so easy to make sound convincing.

  49. JLM

    .Elections are binary. You get two candidates and you pick one. Jean Paul Sartre said, “You get the wife you deserve.”We get the President we deserve with our pathetic voting record.It is perfectly valid to vote for the lesser of two evils. Happens all the time.As to Trump — conceding ALL of his flaws — he would be good for what ails America right now: feckless, unfocused, milquetoast ideology posing as leadership.The problems of jobs, illegal immigration, the economy — all call for steady leadership and a plan. We currently have no plan and in the land of the blind, the one-eyed Jack reigns supreme.Foreign policy is in a shambles. The worst in my lifetime. My 97 year old late father’s worst indictment was “you wouldn’t make a corporal in any outfit I served in” which he routinely applied to this administration.There is a difference between a corrupt liar (Hillary) and a bullshitter (Trump) and I could live with that difference.I was hoping Jesus would return and run as an Independent but, alas, He refused.Trump. Funny thing, he’d probably make a great President.JLMwww.themusingsofthebigredca…One more thing — the guy builds 100-story buildings. No small undertaking. I used to build 50 story buildings. I have a decent education — engineer/MBA — and it took every brain cell I had to do it. Folks thought I was pretty good at it but it was hard. Trump is nobody’s dummy. The guy is not stupid. He may be NYC brash and he would be well served by a filter between his ears/brain/mouth but he is not stupid.

  50. JLM

    .The firing of Corey Lewandowski was a text book case on how to do it right.Firee sings the praises of former employer.Former employer plays it cool.It was also the right move as Trump streamlines things for a national run. Lewandowski was single A. Mantafort is The Show.Trump, making all the right moves without seeking adulation from the MSM/GOPe/pundits.Trump in a cake walk.JLMwww.themusingsofthebigredca…

  51. LE

    This is why the sole “son of a bitch entrepreneur” and prima donna company president (in some cases, say Jobs) rocks. They are able to do things on gut without worrying about what the peanut gallery thinks or what the impact might be on anyone or if they scorch the earth. They don’t have to please and serve many masters. It is not a horse by committee is a camel type results. As a friend in high school once said to me “you have to be the crazy driver that others look out for”.The man is very convincing on a personal level. Ever been through a divorce? You have no idea how hard it is to get an ex to sing your praise unless you handle it exactly and precisely the right way or bend over and grease up. Somehow with Donald I doubt that happened.

  52. Lawrence Brass

    He don’t need adulation, he has an infinite supply of that provided by himself. But he does need *alignment* with the GOPe, and that won’t happen magically, he has to do his part.

  53. Salt Shaker

    They’ll come together at the convention in support of the Rep party, its values, history, etc. I don’t see Paul Ryan or Mitch McConnell getting up and touting DJT’s praise. Ain’t gonna happen. They’ll be implicit support (8 yrs. of O is enough) but a lot couching of words w/ respect to the candidate. They wouldn’t be politicians if they lacked such skills, but it will be painfully obvious to all where they truly stand and an embarrassment to Trump (and inherently the party).

  54. JLM

    .The winning of the nomination and the winning of the general election are two distinctly different exercises in American politics. One is amongst one’s likely kindred spirits and one is the world writ large.Trump is blessed to be able to run against Obama (Obamacare really) and the carnage lefty by his administration. When Obama was “hope & change” he was a formidable Pied Piper. That rose has wilted.Hillary Clinton has not a single legislative or diplomatic accomplishment upon which to found her campaign. She is counting on the sympathy vote of having been married to Bill Clinton (a real phenomenon in my view and real, too).Democrat voter turnout in the primaries is illuminating as is Republican turnout.Folks seem to be unable to embrace and understand the lessons of 2014 which was a referendum on Obama policies.Trump will do just fine but wait until after Labor Day to get excited. It’s just showmanship between now and then.JLMwww.themusingsofthebigredca…

  55. Lawrence Brass

    I don’t know. What I do know is that my shoulder will be there for you in November, in the case your safe place is taken.

  56. JLM

    .There is no GOP. There has not been for a long time. The GOP — Ryan and McConnell — delivered Obama’s budget votes with every initiative intact.They did not touch the debt ceiling, the sequester, the balanced budget, the level of military funding, Planned Parenthood.Nobody who gets up and goes to work thinks anybody has their interests at heart. Look at all the crybabies cursing Trump — the GOPe, the billionaire class, the Party elite, the MSM, the pundit class.Talk about a lucky guy.Meanwhile, median family income is down, jobs are down, wages are down, health insurance is up, deductibles are up — the hammer wielding, muscle working class in America is getting screwed.Veterans are getting screwed. The House and Senate voted to reduce active duty military housing allowances. WTF?The illegal immigration class is being treated in a first class manner.Trump is reaping what the GOPe has sown.The fire is well lit. This fire is what drove the 2014 elections. Big Republican win in the Senate, House, Statehouses, Governor’s mansions. Big win.The GOPe will be lucky to get table scraps when this bloodletting is done and I say piss on them. All of them.JLMwww.themusingsofthebigredca…

  57. JLM

    .Haha, wrong generation. Not the safe place bunch. Though I do greatly appreciate the offer.JLMwww.themusingsofthebigredca…

  58. JLM

    .Ryan and Mitch are in a lose-lose situation already.If they don’t support Trump and he wins, they are screwed and Trump will have their asses when he’s in the White House. He will own them.If they don’t support Trump and he loses, they are screwed with their own rank and file, some of whom will blame it all on Ryan and McConnell.Ryan was an unsuccessful VP candidate who got schooled by Joe Biden.Wild card: Hillary gets indicted and Trump literally strolls into the White House. I rate this a real possibility.JLMwww.themusingsofthebigredca…

  59. Donna Brewington White

    I was a bit shocked to get the “breaking news” email from the NY Times announcing that Trump’s election funds were $1.3MM compared to Clinton’s >$40MM — and this was supposed to be alarming, especially compared to previous elections. As though anything in this election — at least concerning Trump — has adhered to precedent.It amused me that they were making such a big deal about this. I guess some lessons are not easily learned.Or perhaps, there is something that I am missing. (That would not surprise me.)