Do digital currencies spell the end of capitalism?

Cryptocurrencies like Bitcoin pose a fundamental challenge to the notion of money itself

It started with the best of intentions: in 2015 a group of programmers inspired by the success of Bitcoin launched a new software platform called Ethereum that allowed users to conduct transactions without a central bank or currency authority using “tokens” called Ether instead of dollars or pounds. Even more exciting, their platform allowed for “smart contracts” so a deal could be made conditional in all sorts of ways, allowing for everything from options contracts tied to future commodity prices to elaborate corporate governance and voting schemes. Having developed this platform and—they thought—worked out the bugs, they decided to create the cleverest smart contract of them all: a “Digital Autonomous Organization” that functions something like a venture capital firm run by algorithm. In 2016 some 11,000 people crowdfunded the DAO with over $150 million in startup funds, many of them developers who had contributed to the core open-source Ethereum codebase.

And then, just as the experiment was about to get underway, a hacker exploited a flaw in the code to make off with roughly a third of the kitty. What happened next is a kind of parable for the future of value in the age of algorithms.

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