This morning a $150 million fund attached to a Bitcoin-like network called Ethereum was hacked.
The fund belongs to a group by the name of Distributed Autonomous Organization. The DAO was built to allow people to invest money into a digital pot in exchange for decision making rights—similar to how equity works. But, rather than put an executive board or bank in charge of managing the money, votes, decision making, and actual investing or buying; smart contracts, or a series of coded rules, act on behalf of the group.
In the hack, a portion of the money worth $60 million has been split off from the main fund into what’s called a “child” DAO. The good news is that the money is on hold. The system is built so that a child DAO can’t cash out any money for 27 days after it has been created. That means members of the DAO have time to regain control of the money.
What’s curious is how the group will ultimately be able to reroute that money back to its original owners. Several ideas have been floated, but no decision has been made. If the money is ultimately lost, members of the DAO will have to question the benefits of a system in which there is no accountability.
Read more about Ethereum and the DAO here.