Every employee, at one point in time or another, probably dreamed of working in a company where no one is the boss. While there are indeed some small businesses, especially startups, that follow that culture, every organization has leaders, managers, board members, and what not. Not DAO. Short for “Decentralized Autonomous Organization”, the very name itself signifies that it has no such overlords. Instead, everything DAO does is determined through “contracts” and computer code. And despite that somewhat nebulous description, DAO has already managed to raise more than $100 million from investors. At least the real world eqiuvalent of virtual money.
On the business side of things, DAO is somewhat like a crowdfunding venture. Except instead of money, it transacts business in Ethereum, yet another and newer cryptocurrency like Bitcoin. DAO’s purpose is to help fund startups and business creating applications for the Ethereum platform. But unlike a traditional venture capitalist, DAO, or rather the groups investing in it, get to decide which organization gets funded.
That decision is made through a voting process. For every Ether, the currency used in Ethereum, the investor gets 100 DAO tokens. These tokens are treated like rights to vote, and the more tokens an investor has, the heavier its vote will be taken into consideration.
While almost democratic in its process, what makes this DAO really unbelievable is that there is really no one managing it, at least not from the top. DAO operates entirely based on programs, with code written by Stock.it, one of the more prominent Ethereum organizations. There have been other such decentralized organization implementations in the past, but this particular DAO has been the first to succeed to this degree.
That said, it’s not clear how far DAO will reach. The crowdfunding process itself will end on May 28, a self-imposed deadline, but the future of such a type of organization is still in doubt. Raising the equivalent of $100 million is no small matter and will definitely call the attention of lawmakers and regulators, many of whom are probably still shaking their heads in the aftermath of Bitcoin. Business themselves might also be a bit apprehensive about the idea of an organization that can operate without or with barely any human control. Another company, DAO.Link, was created just to provide a physical address to be used for legal and tax purposes.
Just like self-driving cars, such a kind of code-run organization might turn out to be more efficient without the fallibility of human nature. But more than those autonomous cars, decentralized autonomous organizations will take a lot longer to be accepted .
SOURCE: Wall Street Journal