Let's keep it simple (if you take a deep dive into DAOs, you might not resurface for a week); it's a company that operates on a blockchain, according to a set of rules enforced by its members and programmed into smart contracts. It is transparent due to its public nature, democratic due to the equal opportunity of members, and decentralized due to blockchain technology. Which all sounds like a good start, but…
A DAO or Decentralized autonomous organization may be created to serve a specific purpose, like funding a project or creating a new cryptocurrency, but it could also be created to operate without any specific goal. No single person or group controls a DAO because they are decentralized. They are also autonomous, smart contracts and AI algorithms eliminate the need for human intervention, and the code is designed to ensure that the organization achieves its goals without relying on any central authority for decision-making. Ok, now it sounds impressive, but…
Decentralized autonomous organizations can be used to create everything from charities to companies, with the potential of vastly more efficient and transparent governance. This sort of pure democracy is revolutionary and perhaps never seen before. It's little wonder DAOs are being touted as the perfect solution for many of the challenges faced today by governments worldwide. There's got to be some drawbacks though, right?
- Self-operational, self-governing and self-sufficient, the organization itself decides how it should operate and what it should do next.
- Efficient method to manage and distribute funds without the need for a central authority.
- Ultimate democracy and inclusivity with members voting on the actions to be taken by the company.
- Increased security, transparency, and accountability due to being based on the principles of blockchain technology, cryptography, game theory, and peer-to-peer networks.
- The elimination of traditional corruptible organizational management structures and hierarchy
(bear with me, I'm still trying to come up with a negative)
The emergence of Decentralized autonomous organizations is shaping the future of business by offering new ways for businesses to organize themselves without relying on traditional centralized management structures. There will always be top-down hierarchical organizations or committee-based models where decisions depend on a vote from members with different levels of power and influence, but now DAOs have thrown a new structure into the mix.
Decentralized autonomous organizations are all about the community, utilizing a consensus approach to bring together remote independent workers with varying skillsets to overcome geographical constraints and do away with the boss!