One of the beauties of cryptocurrency is its decentralization. This means that no third party is in control. If no intermediary is in control, then what is the alternative?
A web of computers, networks, and nodes are used to “get things done”. What happens when you take this decentralized approach and use it for community or business? You get a DAO, a decentralized autonomous organization.
If you’re unsure of what that means or looks like exactly, we’ve constructed a guide to get started. Read on to learn all about the world of DAOs.
WTH Was The DAO?
With its programmed rules, autonomous nature, and consensus protocol, Bitcoin is arguably considered the first fully functional DAO. Unfortunately, not every DAO will be as successful as Bitcoin.
In May 2016, a German startup, slock.it, created a DAO entitled, “The DAO.” This decentralized autonomous organization was in support of its version of Airbnb. With a successful crowdfunding campaign and raised over $150 million in ETH, all was good.
By June 2016, hackers had taken advantage of holes in The DAO’s code. They managed to siphon $50 million in ETH. Due to this, people’s trust in DAOs and Ethereum waned.
When you think of an organization in the traditional sense, they are backed by legal status.
What is an organization was both decentralized and autonomous? What would make something officially a DAO? What is the DAO definition?
With a DAO, there is no need for a third party when dealing with financial transactions. Instead, a decentralized autonomous organization would take full advantage of the blockchain and smart contracts. This means that no one can edit or alter anything without everyone noticing due to the transparent and public nature of the blockchain.
If you’re left ponderingg “what is a DAO?”, know that they must follow a set of rules with funding (i.e. tokens) to reward its members. For any changes to occur, all members of a DAO must vote rather than a sole party.
For a DAO to be successful, it must be secure and allow investors to configure the autonomous organization.
DAOs Today and the Metaverse
What are DAOs used for today? Common occurrences of a DAO include charities, fundraising, investments, borrowing, and NFTs.
For example, donations can be accepted by anyone without the need for a middleman. Many analysts and industry insiders believe that these DAOs have the potential to replace traditional companies.
Imagine owning a fraction of a song via an NFT. All of this can be performed with cryptocurrency, the metaverse, and smart contracts.
The Future of Business
Is a DAO the future of business? That remains to be seen. It is without question that blockchain technology is here to stay.
What do you think about this new way of interacting with a community and organizations? Would you ever join a DAO?
For much more insights on business, be sure to browse our blog.