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.
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.
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.
Don't get me wrong, even though i'm invested in the DAO a bit, I fully expect there will be serious disasters like this along the way. I'm not blind to how overwhelmingly likely it is that at least some people will run off with at least some of the money they get. But I do think these issues will get shaken out over time. And then we'll simply be left with: is it a good idea to let the wisdom of crowds make investment decisions? (also, likely the answer here is an emphatic: no, but it'll be interesting to find out).
There might be an exception when the extradition request is issued by an EU country, but I'm not sure how this would be handled. Afaik the EU requires member states to extradite citizens and non-citizens to other member states. However, (afaik) the law that prevents Austria from extraditing its own nationals is at the constitution level.
Austria did reserve the limited possibility of refusing enforcement of EAWs on its citizen for acts not punishable under Austrian law, but that's it; which is not much different from the optional non-execution provision available to all EU states.
It also has bilateral extradition treaties with other non-EU states including the USA, again, with some reservations for its own citizens. But to say Austria doesn't extradite its citizens is wrong. For most crimes, any other EU state can issue a warrant and have Austrian citizens arrested and summarily removed without any full-blown extradition proceeding.
The law for this is "§ 12 ARHG Verbot der Auslieferung österreichischer Staatsbürger" which is part of the Austrian constitution: http://www.jusline.at/12_Verbot_der_Auslieferung_%C3%B6sterr...
https://books.google.com/books?id=0H5XqvUu3B4C provides an English explanation of that law:
1173. Extradition of Austrian nationals is not admissible pursuant to Article 12, paragraph 1 of the ARHG. The authorities mentioned that this provision has the rank of a constitutional provision and, as such, requires a 2/3 majority of Parliament to be amended. Nevertheless, as of January 1, 2009, Austria will be in a position to extradite its own nationals to other EU-Member States in accordance with Section 5 EU-JZG.
1174. Where extradition for ML is denied on the sole ground of nationality, the Austrian courts are competent under Article 65, paragraph 1, no. 1 of the StGB (jurisdiction over acts committed by Austrians abroad) and must conduct the proceedings in the same way as for any other criminal offense under national law. The Austrian courts also have explicit jurisdiction over terrorist acts and terrorist financing when the perpetrator is Austrian (Article 64, paragraph 1, nos. 9 and 10 of the StGB).
Try setting up a business in one of them and let me know how you like the environment.
There are tons of examples of this happening in practice, in the real world, right now. All you have to do is look.
How relevant is China's law for an US citizen who doesn't leave the country?
At least german authorities will be interested since Slock.it UG is registered there.
NB: They do not even have a website that is conformant with german law. This is not a big deal, however, it does not strengthen my confidence that these guys are able to create code able to manage a few hundred million dollars crowdfunded capital.
That strategy didn't work out too well for Zenefits.
PG has expressed a view that he favors start ups that push regulatory boundaries, but I'm sure his view is more nuanced than such a blanket statement.
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.
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 ;)
That being said I think ethereum is very interesting but enormously risky (even more so than some other crypto-currencies). I think experiments like this are fantastic, but starting with 150 million is not. It would be much better in my opinion if it started with 1000 dollars and tried to grow from there gradually.
As far as incentives go, 150 million is a huge incentive to play fast, loose, and dirty by any means necessary to get balance into keys you control and cash out. From what I've seen of kickstarter, the internet is WAY less skeptical than they should be and it seems everyone needs to learn the lessons of their grandparents on how not to lose money to false promises.
As a result those equity owners could be on the hook for claims and judgments against the DAO for sums in excess of the value of the Ether they've paid in or the tokens they've received.
For instance, you are already scared and don't want to deal with this anymore, you can just take all the ETH that you put into this and forget the whole thing happened.
However, there are some issues with timing, and other attack vectors/flaws in this mechanism outlined in the research being referred to in the article.
Here's the original research paper. It's a very good read: https://docs.google.com/document/d/10kTyCmGPhvZy94F7VWyS-dQ4...
Put another way, the stock market rewards passive investors with exactly the same rewards as active investors (which has its own problems - shareholder control over management is notoriously lax), but the DAO goes to the opposite extreme.
I personally think that calling for a moratorium is presumptuous - I'm certainly glad there was no moratorium of the stock market when it was introduced because some economists identified some real flaws. But it is a well researched critique.
One could argue that the thread consists of nothing but trolling, and that no one could possibly be so stupid as to invest their entire life savings, take out loans, and attempt to use credit cards to buy coins. Unfortunately, I've seen it happen.
The conversations on that thread are almost exactly the same as they were several years ago. "Hold. Things will get better, you simply must hold." "But I lost half my life savings..."
The locks or the company does zero marketing?
Also, I went to their page:
First thought: "OMG this looks like just another bullshit startup". Pages looking like that are a pretty reliable signal of very low value to presentation ratio...
It looks like you get less regulartion and legal weight if things go wrong...am I missing something?
If you understand how Wall St. works then the question becomes 'why does anyone use regular funds'.
The general consensus among the developers was that the DAO isn't ready for a real business, and any business owner intending to use the DAO would face real potential risks for loss of funds or worse.
Still, it's a really interesting idea. Wish it was ready for prime-time.
Sorry, but I had to stop reading there. The sentences do not logically follow each other. The other words used by the author are not equivalent to what Sure was quoted as saying. In fact, the author's assertion removes all autonomy from a token holder and reduces them to a revenue maximizing rubber stamp.
Edit: if you can't deal (or even read), pls downmod
The author conflates an (presumably autonomous) individual's true preference with necessarily increasing the net worth of the DAO. There is no a priori reason to believe that.
Edit: you could, like, you know, post a reason to believe the equivalency.
(given the voter is mainly interested in profit, then) IF a voter thinks that the proposal will yield profits and increase the net worth of DAO: vote yes
but only if their interests align that way. if they don't, obviously their decision will be based on other factors.
the point being, it should be straightforward and obvious to vote yes or no, depending on whether the result of a majority-vote yes or no, would align with your particular interests yes or no.
while that statement seems almost tautological, it's a very desirable requirement for voting systems. I'm not 100% sure on the terminology (it's been a while since I studied it) but it might be called "monotonicity" or something.
the point of the article was that in some cases it would be advantageous to do something different instead of voting yes or no along with your particular interests. in this case that it would be better to split than to vote no, in many cases. that demonstrates the (mathematical/logical) assumption of monotonicity (if it was called that) is violated.
but you only need one example to demonstrate that. so it doesn't quite matter that this is not everybody's incentive, as long as it's a reasonable incentive that people may choose.
I admit the added bit about "increasing the net worth of DAO" raised my eyebrows as well. I just assumed many profit-interests would align with the net worth of DAO, and that it'd be healthy for the system or something (I don't know).