- Ethereum is a contracting language combined with a crypto currency; to run the contracting language requires miners to not only determine the solution to a puzzle (as in Bitcoin), but also to run code written by contract writers in a virtual machine[1]; the blockchain stores the results of these computations
There's a lot written on the DAO (just search HN), but a quick summary:
- A DAO is an autonomous organization that is self governing, with its by laws written into code - and often the potential to fork off if you disagreed with the majority decisions
- "The DAO" which caused the recent blow up was the first public iteration of this and was an investment fund meant to encourage apps on the blockchain, by letting others fund it and then vote on proposals to receive money
- "The DAO"had substantial flaws in how it was written, tested, and released
- This was very successful by funding metrics, but that is based on a highly speculative currency that had appreciated 30-40X in a few months (otherwise, it might have just been a few million dollar experiment)
- The flaws were pretty egregious (e.g., naming two functions essentially the same - and calling the wrong one, not putting in place proper mutexes) - and many on HN who worked on any mission critical code (e.g., finance, embedded systems) would be surprised at how quickly it was released without testing, community discussion, or a thoughtful rollout plan
- Yes, people are losing money in two ways 1) in "The DAO" itself, if the funds can't be recovered fully, 2) due to the price of Ethereum to Dollars/Euros which people own and trade (which has fallen 50% since "The DAO" issues, but that is still 10-15X up since late last year)
[1] Technically, Bitcoin miners also interpret contract code, but the language is more complex and limited - with the most popular Bitcoin contract to simply lock and unlock bitcoins