The idea of a DAO, a Decentralized Autonomous Organization, was first fronted after the successful release of Bitcoin back in 2009. Inventors began to imagine a world without intermediaries. Everything would take place autonomously. It could have implications both for the financial system and for innovation. One of the main reasons for the creation of a DAO is to function as most corporations operate. However, it would not have the same inefficiencies that usually hinder these large organizations.
How Can a DAO Benefit Consumers?
Ethereum has introduced many unique capabilities to blockchain technology. With the Ether token on this network, you can hold a crowdsale or an IPO and get an idea off the ground in the shortest amount of time. Once the DAO has been created together the with rules in the smart contract, the blockchain network will secure it.
When an individual takes part in a DAO crowdsale, they are mostly buying shares with their Ether. Now with these shares in hand, they can influence every aspect of the company once it launches. For instance, they can vote on the company’s expenditure and the products they think the company should make.
With DAOs, individuals will have an equal say in the organization, no matter where in the world they are located. Besides that, they will have full ownership of the investment in which they partake. Entities will now be liable in terms of programming, for any creations. It will no longer be a case of crowdfunded projects that fizzle out in the middle of funding.
DAOs Can Enable New Ideas
DAOs will make it possible for business models that were previously impossible. They will lead to the possibility of all manner of structured organizations. This may include decentralized hedge funds, devolved governments, decentralized public utility providers and many more.
Some are wary of creating autonomous code that cannot be reversed. Once a DAO is created, the smart contract underpinning it is impossible to change. It has its advantages, but if someone spots a bug on the contract, there is no way to change it.
Thus, if a person takes advantage of a bug, he or she can drain out funds as everyone watches. Technically, the hacker would be following the set-out rules of the contract. There is still a lot of debate about how such issues can be handled.
One other problem that DAOs will face is regulatory concerns. The regulation on cryptocurrency has been a hindrance rather than offering solutions. The rise of DAOs will just create another headache for the regulatory environment.
Despite these few issues, the DAOs come with total transparency. It means that investment risk is minimized. Besides that, people will be able to sell their unique DAO without a need for any technical knowledge.
Do you think DAOs will ever become a reality? Will they ever become mainstream? Leave us your thoughts below.