{"id":181562,"date":"2016-05-18T19:56:00","date_gmt":"2016-05-19T00:56:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2016\/05\/18\/this-is-either-a-scam-or-this-will-become-a-scam\/"},"modified":"2016-05-18T19:56:00","modified_gmt":"2016-05-19T00:56:00","slug":"this-is-either-a-scam-or-this-will-become-a-scam","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2016\/05\/18\/this-is-either-a-scam-or-this-will-become-a-scam\/","title":{"rendered":"This Is Either a Scam, or This Will Become a Scam"},"content":{"rendered":"
The latest thing in crowd funding is something called a decentralized autonomous organization (DAO) and my nose tells me that this is, or is going to be, a new way for people to have their money stolen<\/a>:<\/div>\n

<\/span><\/span><\/p>\n

We\u2019ve flagged cryptocurrency enthusiasts\u2019 distinctly mystic beliefs in spontaneously emergent headless organisms before.<\/a> <\/p>\n

Now something called the \u201cDecentralised Autonomous Organisation<\/a>\u201d \u2014 The DAO, not to be mistaken with Tao<\/a> \u2014 project has begun to attract actual column inches in mainstream publications<\/a>, albeit in keeping with the new style of journalism\u2026 i.e. devoid of critical evaluation and taking all claims at face value. <\/p>\n

The DAO is currently raising Ether tokens (the pre-mined currency of the Ethereum blockchain, itself funded via a bitcoin capital raising) \u2014 $110m at mark-to-market rates today \u2014 in exchange for DAO, a token which \u201cgrants its holder voting and ownership rights.\u201d As Techcrunch put it<\/a>, holders of DAO \u201ccan use their tokens to vote on big governance issues (akin to traditional shareholders) but also on minute details of how The DAO spends its resources. In this way, token holders have total control over The DAO\u2019s assets and its actions.\u201d <\/span><\/p>\n

The DAO explicitly states its tokens are not a form of equity \u2014 even if to the average bystander everything about the DAO token looks, smells and feels like common equity. (Perhaps the feeling is that if you dazzle them with \u201ctokens\u201d instead of stocks, those pesky unlicensed stock solicitation rules won\u2019t apply? We\u2019re not sure regulators will see it that way.) <\/p>\n

We won\u2019t go on about how the world has had 100 years (or more) of feedback with respect to what happens when you remove the professional executive\/management function from corporate identity, or transfer all day-to-day decision making to amateur committees. Any cursory review of modern history (or a quick read of Animal Farm<\/a>) will flag up the problems: indecision paralysis; wasted time and resources on voting and bureaucracy; entirely non-diplomatic means of grabbing power just to get things done; uninformed decision making; exploitation of the ignorant; tragedies of the commons scenarios and last but not least: a lack of skin-in-the-game accountability for poor decision making leading to post-facto due diligence processes with dire consequences for capital, human resources and environments. <\/p>\n

We won\u2019t even mention that $110m raised in illiquid tokens based on mark-t0-market valuations is akin to a paper profit only, and might create a helluva Ether currency collapse if it\u2019s actually spent on resources in the real-world\u2026<\/span><\/p><\/blockquote>\n

I don’t know if this is a scam now, but I do know that it it isn’t, it will be, and it will be sooner than later, because this is what happens when people set up a business based on self delusion.<\/p>\n","protected":false},"excerpt":{"rendered":"

The latest thing in crowd funding is something called a decentralized autonomous organization (DAO) and my nose tells me that this is, or is going to be, a new way for people to have their money stolen: We\u2019ve flagged cryptocurrency enthusiasts\u2019 distinctly mystic beliefs in spontaneously emergent headless organisms before. Now something called the \u201cDecentralised …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1005,970,997,1003],"tags":[],"class_list":["post-181562","post","type-post","status-publish","format-standard","hentry","category-business","category-corruption","category-internet","category-philosophy"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/181562"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=181562"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/181562\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=181562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=181562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=181562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}