Technological advancements have shaped and shattered the very fabric of society throughout history. Changes to organisations, social structures, and culture itself are created with each innovation in technology, Tesla’s invention of AC electricity, the internet itself, and, most recently, blockchain technology, are such examples….

A new wave of disruption within our society has been simmering for some time now. Cryptocurrencies have caused widespread curiosity since Bitcoin first launched in 2009. While many are still sceptical about the adoption of a decentralised system, the radical disruption caused by blockchain has proven impactful.

Technology used and adopted varies between cryptocurrency projects. Some use existing protocols (like ERC20 tokens which use Ethereum), and others create their own blockchain. A blockchain is essentially a distributed ledger on a network of interconnected computers. The transactions are validated by the miners and held by the nodes which act as the guardians of the ledger (each holding an independent copy).

The main difference between a transaction on blockchain and a fiat transaction through, say, online banking is that when a transaction is sent through the blockchain, an intention, or request, for the transaction to occur is first broadcast throughout the network, and then validated by miners. This transfer will be recorded and added to the history of the entire network’s transactions within a block of data. Thus, an auditable, transparent, and entirely open record of the transactions occurs throughout the network without requiring a “middle man”. The miners do away with the need for a trusted third-party. There is no need for a PayPal or a Bank of America on the blockchain. The miners have economic incentives to ensure that they act in good faith and don’t lead the network to the age-old economic situation of the tragedy of the commons. You can read more about miners and why they do what they do here: https://www.coindesk.com/information/ethereum-mining-works/

Now that we know what blockchain is let’s move to something fascinating!

Meet DAO:

“Over 18,000 stakeholders and not a single employee. The DAO was stateless and served planet earth.”

DAO is an acronym for Decentralised Autonomous Organisation; the organisation of the future. Although this may not seem like the future to some, given the previous pilot of a DAO by Slock.it in 2016, the concept acts a framework to guide the organisations of the future. Unlike the institutions that we have become accustomed to in daily life, such as banks, investment funds, governments, and even your local mom and pop grocery store, there is no one central source of activity within a DAO. Simply, this means that the shareholders, large and small, were utilised to deliver the wisdom of the crowd — they collectively acted as the brain of the blockchain company. There wasn’t a CEO — or any formal employees for that matter! Slock.it pioneered the concept (check them out here: https://slock.it) and ran their incredible vision like a blockchain investment fund which gave money to curated projects in return for a future reward.

The DAO recorded and timestamped all activities on the Ethereum blockchain. Anyone could view — without reliance on trust — what decisions were made, proposals pending voter approval, and the distribution of funds. This concept is unbelievably powerful. Unfortunately, there was an attack on the DAO and funds were taken. After this happened, the project was put on hold.

Onward!

Despite what happened, an interesting use-case remains for the DAO as a charitable entity. Unfortunately, our organisations that require the most trust, charities, have lost public faith over the past few decades. In light of recent scandals, one’s mind naturally drifts to the thought that we can do better. We have the technology to change this. News of charities abusing funds, engaging in poor conduct, and having costs at unsustainable levels are now commonplace. How did we get here? Slock.it has proposed a Charity DAO which intends to restore faith through transparency. The charity would be radically transparent and governed by the donors. It’s an incredibly powerful application of the DAO.

Well-known not-for-profits such as the World Bank and the UN see the value in using blockchains for impactful social activities. Both of these organisations are currently exploring the idea of sending international aid to countries in need utilising the technology. Critical findings were made when considering this model though. Not all countries will benefit from such technology. The level of development within each area is a prerequisite to receiving funds. Many underdeveloped nations have yet to solve the issue of providing the basic needs of clean water, food, shelter, and electricity for people.

The concept of Decentralised Organisations is raising important questions about how society can transition to a transparent, trustworthy future that will be radically different to the one we know today. It’s an exciting time to be watching the shift happen, DAO by DAO.

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