An analyst looks at code in the malware lab of a cyber security defense lab at the Idaho National Laboratory in Idaho Falls, Idaho September 29, 2011. REUTERS/Jim Urquhart (UNITED STATES - Tags: BUSINESS LOGO CRIME LAW MILITARY POLITICS SCIENCE TECHNOLOGY) - RTR2S0ON
The DAO has been set up to invest in other businesses, making it a form of investor-directed venture capital fund © Reuters

An automated business run on computer code, with no human input beyond its anonymous backers, has raised the equivalent of $120m in digital currency.

The financial support for the vehicle, called The DAO, makes it the most advanced embodiment yet of an idea that has long captivated idealists: automatic companies that operate without managers or boards of directors, making them the purest form of shareholder governance.

The DAO — an acronym of decentralised autonomous organisation, the name given to such entities — has been set up to invest in other businesses, making it a form of investor-directed venture capital fund.

“There are no humans controlling it, it’s just the code,” said Simon Jentzsch, a German software developer who was one of the people behind the idea. “There is no one who will take money for favouring one or other contract. You will have the wisdom of the crowds.”

As of Monday, The DAO had raised 10.7m units of a digital currency called Eth, said to be worth $120m. Its investors will vote on what to do with the money after fundraising ends on May 28, and after choosing between proposals submitted to its website.

The organisation is governed by a set of so-called smart contracts which run on the Ethereum blockchain, a public ledger designed to make its operations transparent and enforceable. The contracts are designed to guarantee things like the “deliverables, responsibilities and operating parameters” agreed by companies The DAO invests in.

The computer code behind the organisation was written by Mr Jentzsch’s brother, Christoph, and released publicly on Github, an online repository for code.

“We didn’t want to be the ones who started or controlled this, we didn’t want to do it for ourselves,” said Mr Jentzsch.

According to The DAO’s website, the only human involvement comes from a group of volunteers called “curators” who check the identity of people submitting proposals and make sure the projects are legal before “whitelisting” them. The organisation’s investors will then vote on which ones to give money to.

As of Monday, Slock.it, a blockchain technology company where the Jentzsch brothers hold senior positions, was one of only two organisations to pitch for financial backing from The DAO. Mr Jentzsch said that, if successful, they would use the money to build a “universal sharing network”, a worldwide network “where you can share whatever things you have, [like] cars or houses”.

He added that Slock.it had not decided yet how much money it would ask for, but that it would have to “negotiate” with The DAO for the money.

Asked how the autonomous organisation could ensure it was not being used for money-laundering by its anonymous investors, Mr Jentzsch said a vehicle had been set up in Switzerland to facilitate The DAO’s investments in other companies, since Swiss law makes it possible to “take money from an unknown source as long as you know where it’s going”.

The only other investment proposal listed on The DAO’s website is for Mobitiq, a French electric vehicle start-up.

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