The blockchain is a disruptive technology. It has the potential to change many aspects of our future lives. Even if governments or corporations would try to stop it, it is impossible to completely eliminate due to the decentralized nature of the technology. It also has the capacity to completely transform the business models we know today.
According to the Harvard Business Review,
“With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world, every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of the blockchain.”
Decentralized Autonomous Organisation (DAO)
Instead of the current hierarchical system in which there are many levels of management involved in most organizations, a DAO involves a set of employees interacting with each other according to a normalized protocol managed by a blockchain.
DAOs run through smart contracts. It is an entity that is on the internet and functions autonomously but also relies on hiring employees to accomplish certain tasks that the automated platform can’t do on its own.
Features of DAOs
- Autonomous: The organization is completely independent of its creators and cannot be influenced by outside forces. A DAO’s financial ledger and protocol rule are maintained on a blockchain, which makes them incorruptible.
- Consensus: To manage the funds a DAO, a percentage (specified in the smart contract) of the shareholders must agree on the decision. The same goes for any proposal for changes or updates to the smart contract.
- Tokens of Transaction: For it to function, a DAO needs a form of a valuable internal property so it can use it to reward certain activities. DAOs do not have managers or executives.
- Contractors: A DAO needs contractors (employees) in order to accomplish the tasks involved in the functioning of the company. These contractors are also designed by voting.
Blockchain and smart contracts could pave the way for decentralized autonomous organizations to be adopted in our economy. This would change the way business is done, giving power back to the people. It would reduce overall bureaucracy and help money being redistributed more equally between all parties involved in any particular entity. This could be the biggest innovation made possible by the blockchain if it is adopted.