{"id":14114,"date":"2018-05-23T00:00:00","date_gmt":"2018-05-22T16:00:00","guid":{"rendered":"https:\/\/www2019.dash.org\/2018\/05\/23\/governance-why-crypto-investors-should-care\/"},"modified":"2021-09-18T11:37:21","modified_gmt":"2021-09-18T11:37:21","slug":"governance-2","status":"publish","type":"post","link":"https:\/\/www.dash.org\/news\/governance-2\/","title":{"rendered":"Governance: Why Crypto Investors Should Care"},"content":{"rendered":"<p>By most measures, the 2016\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/i\/initial-coin-offering-ico.asp\">initial coin offering (ICO)<\/a>\u00a0for\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/v\/venturecapital.asp\">venture fund<\/a>\u00a0Decentralized Autonomous Organization (DAO) was a success. Billed as the \u201clargest\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/c\/crowdfunding.asp\">crowdfunding<\/a>project in history,\u201d\u00a0it raised a record $100 million worth of\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/e\/ether-cryptocurrency.asp\">ethers<\/a>\u00a0in less than two days. (See also:\u00a0<em><a href=\"https:\/\/www.investopedia.com\/articles\/insights\/051716\/dao-raises-130m-largest-ever-crowdfunded-project.asp\">DAO Raises $130 Million Plus, Largest Ever Crowdfunded Project<\/a>.<\/em>)<\/p>\n<p>DAO was stateless and decentralized, meaning that its operations were not tied to a specific geographic area and it had a flat\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/o\/organizational-structure.asp\">organizational structure<\/a>. DAO token holders could vote on projects for investment and the relationship between them and the overall organization was governed by\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/s\/smart-contracts.asp\">smart contracts<\/a>\u00a0on\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/e\/ethereum.asp\">ethereum\u2019s<\/a><a href=\"https:\/\/www.investopedia.com\/terms\/b\/blockchain.asp\">blockchain<\/a>.<\/p>\n<p>But a hack, which exploited security vulnerabilities in its code and resulted in the theft of $55 million worth of ether, put paid to its ambitions. The question of what to do with the remaining funds cleaved the ethereum developer community. Large investors in the project demanded a\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/h\/hard-fork.asp\">hard fork<\/a>, which would have refunded\u00a0investors by creating a \u201cwithdraw\u201d function in the code.\u00a0But developers argued for a\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/s\/soft-fork.asp\">soft fork<\/a>, which would have frozen funds and prevented the hacker\u00a0from cashing in on the stolen ether. Underlying their argument was the \u201ccode is law\u201d rule, wherein code pertaining to the original blockchain should remain immutable regardless of hacks.\u00a0The money guys won, and a hard fork created ethereum while the original blockchain continued as\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/e\/ethereum-classic.asp\">ethereum classic<\/a>. As of this writing, ethereum is the second-most-valuable\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/c\/cryptocurrency.asp\">cryptocurrency<\/a>\u00a0while ethereum classic is ranked 17th. Trading in DAO tokens was discontinued last year. (See also:\u00a0<em><a href=\"https:\/\/www.investopedia.com\/news\/daos-and-potential-ownerless-business\/\">DAO, Blockchain, and the Potential of an Ownerless Business<\/a><\/em>.)<\/p>\n<p>Regardless of its consequences, the DAO fiasco brought governance issues within cryptocurrencies into sharp focus.<\/p>\n<h2 id=\"why-does-governance-matter-for-cryptocurrencies\">Why Does Governance Matter for Cryptocurrencies?<\/h2>\n<p>Equity markets have clearly\u00a0defined stakeholder structures for investor recourse. These structures have resulted in governance systems that protect investor interests and prevent rogue executives from running amok with the company. But cryptocurrencies have largely been shielded from similar oversight. The DAO hack is just one example of governance gone wrong within cryptocurrencies. Similar \u2026\u2026.<br \/>\nPlease keep reading at: <a href=\"https:\/\/www.investopedia.com\/tech\/governance-why-crypto-investors-should-care\/\">https:\/\/www.investopedia.com\/tech\/governance-why-crypto-investors-should-care\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By most measures, the 2016\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/i\/initial-coin-offering-ico.asp\">initial coin offering (ICO)<\/a>\u00a0for\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/v\/venturecapital.asp\">venture fund<\/a>\u00a0Decentralized Autonomous Organization (DAO) was a success. Billed as the \u201clargest\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/c\/crowdfunding.asp\">crowdfunding<\/a>project in history,\u201d\u00a0it raised a record $100 million worth of\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/e\/ether-cryptocurrency.asp\">ethers<\/a>\u00a0in less than two days. (See also:\u00a0<em><a href=\"https:\/\/www.investopedia.com\/articles\/insights\/051716\/dao-raises-130m-largest-ever-crowdfunded-project.asp\">DAO Raises $130 Million Plus, Largest Ever Crowdfunded Project<\/a>.<\/em>)<\/p>\r\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[216],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Governance: Why Crypto Investors Should Care - Dash<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.dash.org\/news\/governance-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Governance: Why Crypto Investors Should Care - Dash\" \/>\n<meta property=\"og:description\" content=\"By most measures, the 2016\u00a0initial coin offering (ICO)\u00a0for\u00a0venture fund\u00a0Decentralized Autonomous Organization (DAO) was a success. 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