Blockchain-based Decentralized Autonomous Organization Is Future!

 

When I first came across Blockchain [1] three years ago, I realized this is a super-powerful technology which can change the whole world fundamentally. I quickly fell in love with Blockchain, did research and even wrote a Blockchain cookbook, which is widely used by my company and our clients. You may not know Blockchain, but you may hear of Bitcoin which is one of the successful Blockchain applications. The blockchain is the underneath technology for Bitcoin. To put it simply, Blockchain is a distributed digital ledger of transactions and shared among a distributed network [2]. It uses cryptography to allow each stakeholder on the network to manipulate the ledger in a secure way without the need for a central authority. The transaction can be a digital currency like Bitcoin. It can also be smart contracts. If we create an organization based on Blockchain network: everyone within the organization is a stakeholder; the organization is run through rules encoded as smart contracts. The organization we just create is Decentralized Autonomous Organization (DAO) [3] and it is the ideal organization in future.

 

The new crypto-economic organization, I consider ideal, is a decentralized organization guided by self-governing and autonomously operating software, with its laws written immutably on the Blockchain [4]. As described in [4], there is no human intervention in the DAO. The DAO is fully controlled by an incorruptible set of coded laws, which is very similar to a constitution. The coded laws are written in auditable open-source software, which is distributed across the computers of its stakeholders. A human can purchase unique cryptographic tokens issued by the DAO to become a stakeholder, which is similar to stocks. The DAO issues tokens to raise capital, in the meanwhile, all stakeholders can vote on proposed DAO directions in a democratic fashion and obtain profits from the DAO. The DAO gives its authority purely through code. In this way, token holders have total control over The DAO’s assets and its actions [5]. In DAO, there are no central points of control. In such a peer-to-peer network everything is transparent and confidential. Finances and business rules are auditable by anyone. A single tiny change needs a majority of stakeholders to agree and every action or rule needs to be verified and it is very easy to verify. In such an organization, all stakeholders obey their own incorruptible rule set. No hidden actions or tricks within the DAO. As described by Seth Bannon [6], “The DAO is a paradigm shift in the very idea of economic organization. It offers complete transparency, total shareholder control, unprecedented flexibility and autonomous governance.”

 

Because of autonomous, distributed, transparent, confidential and self-regulating properties, there is no human bias and full of collective intelligence in the DAO. I think DAO has advantages to solve many issues or challenges in the traditional organizations. The DAO is the ideal organization of future. The future of trust is here now, without a crappy boss!

 

Reference:

1. https://en.wikipedia.org/wiki/Blockchain
2. https://blogs.wsj.com/cio/2016/02/02/cio-explainer-what-is-blockchain/
3. https://en.wikipedia.org/wiki/Decentralized_autonomous_organization
4. https://www.linkedin.com/pulse/understanding-autonomous-organizations-blockchain-paul-kohlhaas
5. https://techcrunch.com/2016/05/16/the-tao-of-the-dao-or-how-the-autonomous-corporation-is-already-here/
6. https://techcrunch.com/2016/05/16/the-tao-of-the-dao-or-how-the-autonomous-corporation-is-already-here/
7. https://advapay.eu/images/news17/blockchain04.jpg (image source)

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