DCG CEO Barry Silbert is Skeptical of Early Ethereum DAOs
If you talk to an Ethereum supporter, Decentralized autonomous organizations (DAOs) are bound to come up in the conversation. The smart contract platform was build to support these sorts of decentralized applications, and the first Ethereum-based DAOs have started to emerge in early 2016.
The crowdsale for The DAO has raised far more money than was raised in the original Ethereum crowdsale, which speaks volumes for the idea that Ethereum is simply a platform for other applications to build upon. Having said that, not everyone is buying the DAO hype.
Digital Currency Group Founder and CEO Barry Silbert was asked for his thoughts on DAOs during a panel at Consensus 2016. Although excited about Ethereum in general, Silbert admitted that he’s a bit more skeptical when it comes to the early DAOs that have popped up so far.
During his response to the question about DAOs, Silbert could not be any clearer in his support for the potential of Ethereum and the underlying ether token. He stated, “I am incredibly excited about the enthusiasm in the Ethereum community, about all things Ethereum, about ether, and about the potential for smart contracts.”
As the founder of Digital Currency Group (DCG), Silbert is heavily involved in funding projects related to digital currencies and blockchain technology. Although DCG has not announced any funding for Ethereum startups up to this point, the firm is expected to make its first investment in the Ethereum ecosystem later this year.
Although Silbert is excited about Ethereum, he does not agree with the vision held by some of Ethereum’s most-ardent supporters. He explained:
“I sense there’s a certain utopian view of society, which I may or may not agree with philosophically, that I just don’t see from a real-world application perspective happening anytime soon.”
Silbert went on to explain that a world where there is no regulation, lawyers, contracts, or SEC rules is not going to exist in the near future. He then clarified, “It may solve some problems. The idea of a decentralized autonomous organization, it’s super interesting.”
Silbert also noted that many of the earliest applications built on Ethereum are related to gambling, Ponzi schemes, or pyramid schemes, but he also admitted that this isn’t necessarily a problem. He added, “That’s OK because that’s an interesting way to experiment; it’s certainly what happened with Bitcoin.”
One of the main criticisms of Ethereum up to this point has been the lack of useful applications that solve real-world problems. On a recent episode of Unconfirmed Transactions, host Dan Anderson and Wall Street veteran Tone Vays described how Ethereum supporters were unable to provide any use cases for the project to them at a recent meetup in New York.
During his panel appearance on day one of Consensus 2016, Silbert seemed sympathetic to the idea that practical applications of Ethereum are yet to be found. He stated: “I don’t think the world needs a decentralized Uber, which is one project. I don’t think the world needs a decentralized AirBnb, which is another project.”
Having said that, it’s important to remember that Ethereum is a platform on which a developer is essentially given the power to build any decentralized application they wish. It’s possible the best use cases of Ethereum have simply not been thought of at this point.
During his final comments on DAOs, Silbert questioned the role these decentralized organizations can play in the real world. He concluded:
“These DAOs that are raising money from the masses with — basically it’s a blank check. It’s a pool of capital that’s going to be deployed in a way that I think will be very democratic. I’m skeptical because I don’t know the role it needs to play in society. I don’t know, in the capital formation process, what’s wrong with our current system that it’s solving for. I’m philosophically supportive. I hope it’s successful, but I don’t see the problem it’s solving yet.”