Olivier Stern, a 31-year-old French socialist with an appetite for risk, recently invested a third of his life savings — 10,000 euros, about $11,000 — in a cryptocurrency start-up that has no legal standing and runs head-on into regulatory obstacles, yet might very well upend the mysterious world of virtual investing.
The start-up, a sort of venture capital fund that calls itself the Decentralized Autonomous Organization, has essentially come out of nowhere in the last month and attracted about $152 million, at last count, from investors around the world like Mr. Stern — making it the most successful crowdfunded venture ever, by a significant margin.
The venture, like so many things related to the digital currencies that cryptographers are creating on the Internet, is difficult to describe, and it may not be legal. But thousands of mostly anonymous investors have already heard about it through word of mouth and sent money — in the form of Ether, a freshly coded form of currency that has held itself out as a new and improved version of Bitcoin, the most popular virtual scrip.
For these investors, in some sense it is the digital equivalent of buying into a bakery with no baker, no menu and no assurance that the ovens will even be delivered. But among the crowd that has invested, faith in the computer code that governs the project appears strong enough to override all those concerns.
After it collects Ether from investors — the deadline to buy in is May 28 — the D.A.O. aims to put the money into other digital currency start-ups. The investing decisions are to be made through online polling of shareholders like Mr. Stern, who has a day job dealing with parking policy in the town of Montreuil, just outside Paris.
“I think it is the beginning of something that could, in a way, make history,” said Mr. Stern, who previously lost a small sum of money he invested in Bitcoin when a major Bitcoin exchange — Mt. Gox — went bust. “Maybe it can fail, maybe it can succeed, but for sure it is an idea that is very interesting.”
The rise of the new venture comes at a time when the technology underlying virtual currencies is rapidly being embraced by the mainstream: Most Wall Street firms and many central banks are experimenting with the blockchain, the online ledger system that Bitcoin and Ether pioneered. Banks hope the blockchain, or something like it, can provide a faster, cheaper way of conducting transactions and storing data.
The D.A.O., on the other hand, returns to the more radical ambitions of virtual currencies. It is set up according to computer code, with no human executives. All decisions will be made by votes of the people who buy in — using software — making it a sort of technology-enabled leaderless collective.
The basic code was written by a 32-year-old German programmer, Christoph Jentzsch. But he is not set to have any continuing role, and the D.A.O. does not hold the money of investors; instead, the investors own D.A.O. tokens that give them rights to vote on potential projects. Mr. Jentzsch said on Wednesday in an interview that he thought the structure absolved him of any legal responsibility for what could happen with the project.
“Of course this venture is fraught with risks,” Mr. Jentzsch said in an email. But he also predicted, “This technology represents the future of the Internet.”
Experts on virtual currencies say that Mr. Jentzsch and others involved have stepped into dangerous regulatory legal territory. American regulators have previously come down hard on entrepreneurs who sold investments using virtual currencies.
Patrick Murck, a lawyer who has long dealt with Bitcoin issues, said that even if Mr. Jentzsch and his collaborators were not operating the venture, they could face legal liability for promoting it if the investments go awry — and, potentially, even if they don’t.
“You can’t code away your legal responsibilities,” said Mr. Murck, who is a fellow at the Berkman Center for Internet & Society at Harvard. “This is something that has been tried before and has failed before.”
As of Wednesday, an Ether was valued at $13 and a Bitcoin at $450 — evidence, perhaps, of the strangeness and subjectivity of these new currencies. The D.A.O.’s reliance on Ether has allowed people to send their money to it from anywhere in the world without providing any identifying information, a design that is already raising concerns about potential money laundering.
The D.A.O. has also faced difficult questions from virtual currency aficionados, who worry that the organization’s code was put together relatively hastily without the sort of security testing that has preceded previous projects based on Ethereum, the technology platform that underpins Ether.
“It’s an unstable thing right now,” said Joseph Lubin, who was one of the founders of Ethereum. “Young, complex machines tend to have flaws and vulnerabilities that you can’t anticipate.”
Mr. Jentzsch acknowledged that he did not anticipate the venture growing to anything close to the size it has reached. The biggest similar projects have attracted a few million dollars.
“If I would have known the size it has grown to, maybe the tester in me would say, ‘I need more testing,’” he said. “This is very risky. It’s all new land.”
So far, two projects have applied to the D.A.O. for funding. One of them is a company run by Mr. Jentzsch and his brother, Simon, that is creating a new kind of physical lock that can be controlled remotely through the Ethereum network, according to contracts written into the network.
The code that Mr. Jentzsch wrote for the organization has several safeguards that would make it hard for him or anyone else to game the voting of shareholders to win investments. But even successful crowdfunding sites do not have a great track record of harnessing the enthusiasm of users to pick good investments.
The creator of a now defunct crowdfunding site fueled by Bitcoin, BitShares, wrote a biting online post on Tuesday arguing that the D.A.O. would most likely fail for the same reason that BitShares ultimately failed: “people problems, economic problems and political problems.”
“My opinion is that the D.A.O. will be D.O.A. (Dead on Arrival),” Daniel Larimer, the founder of BitShares, wrote. “The theory of jointly deciding to fund efforts will face the reality of individual self-interest, politics and economics.”
The possibility of failure did not deter Mr. Stern, the Frenchman who put in the equivalent of $11,000. He said he thought the D.A.O. would provide a good financial return, but he was also motivated by his belief that the venture is an experiment in a new way of organizing companies, and potentially even governments.
“It’s important for people to propose and try an alternative,” he said.
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