I see the future and it’s DAO shaped
Can you sleep on a method of organizing with other people arround the world whom you don’t know, being the master of your sea, and making your own decisions independently all encoded in a blockchain? Decentralized Autonomous Organizations (DAOs) are making this dream come true. Blockchain is not only a technological revolution, but first and foremost a socioeconomic revolution. It is a tool to bring us into a more decentralized world.
If we look back, the first generation internet revolutionized information, this is why we call it the information data highway. About ten years later, we had the so called web 2.0. The internet became more mature and programmable, and all of a sudden we had on one hand social media platforms and on the other hand a peer-to-peer economy where the consumer and the producer came closer to each other of informations and opinions of goods and services. Thus, the original vision of the internet was to pave the way for a decentralized world where everybody could share information online. But in the web 2.0 it became very not so, with those platforms. It brought us peer-to-peer economy but with this “huge man in the middle” who got in command of the data and dictated the rules of transactions. What we’re doing now with blockchain and other technologies of the decentral web is that we’re redesigning data structures given the fact that we are already living in the connected world.
If we think of blockchain in the context of the internet, it is the driving technology behind the decentralized web or also referred to as the web 3.0. You could say it’s like a decentralized world computer ; it’s a distributed network of computers’ peer to peer-to-peer network, the protocol could be seen as the operating system where you can run decentralized applications or smart contracts on top of it. We’re reinventing not only the internet but also the computer itself.
Blockchain allows real peer-to-peer transactions without the middle man, it all started with Bitcoin; two people who don’t know and don’t trust each other sending money from into each other without the trusted third party in the middle. It all boils down to one question of trust, it’s a protocol decentralizes trust matter-of-factly, and instead of that third party verifying transactions are verified in a democtatic way by consensus, and it’s all excuted automatically, there’s no people behind it but it’s in fact machine consensus.
The heart of this machine consensus is the smart contract which a code running on top of the blockchain the codifies the rules of a transaction, and when the rules are met, the transaction gets excuted. This is highly disruptive because it drastically reduces cost of compliance and enforcement because they happen on the fly. While it’s true that it all started with Bitcoin and money without banks, it can apply to pretty much any industry. We can have selling books without amazon and sharing content without youtube.
Now, the highest form of a smart contract is a DAO. They are in theory very complex smart contract that defines the bylaws of an organization. If we look at it, Bitcoin is the first DAO, it’s not only money without banks but it’s also money without bank managers. There is no central Bitcoin authority.
If we look into organizations we have today, whether political or economical, they’re very much organized in a hierachical top-down way. Smart contracts and the protocols that are machine consenus that is auto enforceable can now define the rules of an organization into auto enforceable codes. This way we can get rid of a lot of bureaucracy whether in private or public organizations. Even though this technology is in the very early stages, it has a potential to disrupt the way we organize society.
“Blockchain and smart contracts are governance technologies that have the potential to provide higher levels of transparency while re- ducing bureaucracy with self-enforcing code. They can minimize existing principal-agent dilemmas of organizations and subsequent moral hazards. Tokens of distributed networks hereby provide incen- tives to automatically align interests in the absence of third parties.”
On the political side, we had before the kings ruling a dictatorship. When we started to implement democracy, the idea was to allow people to participate in the consensus process. The problem with big societies that it’s inefficient for everyone to take part in every decision-making process. This why forms of democracy that we have nowadays are represenative democracies. These institutionalized representative democracies are in a way very hierarchical. We as citizens we can vote every 5 years but we have little power over what the representatives do. We can not revoke that power with very limited means in most cases. Government entities are trusted third parties in a way, and with blockchain we’re in a situation where we could make concepts like liquied democracy on one hand or holocracy in the other hand happen in a much more efficient way.
Smart contracts or machine consensus are very efficient when we can predict what will happen. It’s easy to put that into code and to reduce transactions costs. However, they’re really lousy when it comes to dealing with unknowns. We can not enforce them. When they occur, we need governance mechanisms that we don’t have yet.
We can see that we all long for a decentralized world, we have been socialized in very top-down structures. There’s a gap between where we want to be and where we can be as a society because we don’t have the tools yet.