The next big thing in cryptocurrency isn’t going to be Bitcoin, Ethereum, or anything like that, it’s going to be DAOs (Decentralized Autonomous Organizations).
Yes, it sounds confusing and complicated, but it’s really not. In fact, if you have ever used Reddit then you are already familiar with the basic principles of DAOs. I’ll explain further below…
What are DAOs?
A Decentralized Autonomous Organization (DAO) is an organization that’s run through rules encoded as computer programs called smart contracts. A DAO has no single leader. The code is designed to replace traditional management structures by automating key functions like payroll and funding allocation. And, while a cryptocurrency wallet can hold coins without there being a human behind it, once you give that wallet certain rights and responsibilities using code, those rights and responsibilities will follow any money transferred into it or out of it.
They’re built using blockchain technology and they’re run by computer code, meaning they’re transparent, self-executing and operate without human intervention. That makes them a decentralized form of organization that could have a huge impact on society. There are lots of possible applications for DAOs, but one example would be an open-source bank that issues loans to customers based on their credit history and cryptocurrency holdings. A customer who’s looking for a loan doesn’t have to go through any kind of application process with a human being at all; instead, he can simply use his wallet to propose terms he finds acceptable and sees if another user will accept them. If he finds someone willing to take his money at those terms then he gets his loan.
If a customer fails to make a payment, he gets charged automatically using programmed rules. And it’s all done through smart contracts that are essentially just computer programs that automatically execute terms and conditions. If those terms change—for example, if his credit rating changes or someone else wants to offer him a different loan deal—then the program automatically adjusts his payments to reflect those changes. He can still take other loans from other users, though; if someone offers him a better deal than what he originally agreed to accept then he can simply transfer some or all of his payments over to that user’s wallet.
They also have some unique features that make them potentially ideal for a wide range of applications. For example, if you want to ensure that someone—say, an employee—won’t embezzle money or take on risky investment strategies, then it’s easy to write a smart contract that locks those funds and investments in until certain conditions are met. And because they aren’t controlled by any individual person, they can be held accountable for their actions without going through conventional legal processes; instead of being sued as an individual, they simply become unable to access any more funds or withdraw from their investments.
They can also do a range of things human beings just aren’t good at. For example, if you’re managing an open-source project that depends on contributions from your community, then paying people based on their contributions to that project isn’t exactly easy. A smart contract could be used to automatically assign payments to contributors, whether they have a single large contribution or a number of smaller ones spread out over time. And even better, no individual person can take those funds; instead, they are transferred into cold storage using private keys only the program can access and become inaccessible until those terms are met.
How do you become part of a DAC?
You can become part of a DAC by buying its tokens. However, that does not mean you automatically receive your share of the profits. If you own some (or all) of a DAC’s tokens, that only means you have a claim on future profits and that you can vote on decisions made by others inside your DAC (e.g., on which new startups to invest in). Whether or not you actually receive any money depends entirely on whether or not there are any profits to be shared with token holders—and how many token holders there are. The more people who buy into a DAC, the less individual influence each person has over its direction and operations.
There are other, more passive ways to get involved with DACs. For example, if you don’t have any money to put into a DAC or if you simply don’t want to deal with all of the extra work and responsibilities that come along with ownership, you can still be part of a DAC by purchasing voting tokens (or shares). By doing so, you receive a single vote on any decisions that need to be made inside your DAC. More control over what your DAC does means higher costs—for example, acquiring one share for $5 currently costs about 3 ETH (or around $1,200), which is significantly higher than buying 10 tokens for $0.50 each.
To use an example, if you wanted to be part of TheDAO and cast your vote on how it should operate, you would need to buy voting tokens. Originally, there were 100 tokens for every one regular token (i.e., 1:100 ratio). As we all know now, that ratio has since changed and right now there are 150 voting tokens for every 1 regular token (i.e., 1:150 ratio). You can either buy these by using a marketplace such as AirSwap or by using a decentralized exchange such as Paradex or 0x relayers. And then once you own some of those voting tokens inside TheDAO, you would get to participate in its governance by casting your vote on any proposals.
One thing to keep in mind, though, is that your DAC may not be around forever. If it ever goes away—due to bankruptcy or lack of interest from investors and users—you would lose all of your assets held there. Therefore, you need to consider if you’re okay with taking such a risk before deciding to become part of a DAC. Ultimately, whether or not you want to get involved with DACs depends on whether or not you believe crypto token investments are going to succeed and how much money you’re willing and able to invest in them.
As you can see, there are several steps involved in taking part in DACs, but once you’ve finished all of them, you should be set for life. If you have any interest in crypto token investing, then I highly recommend looking into what DACs have to offer. This could just be one of your best chances to invest early before they grow and make a massive impact on our economy. And who knows? You might even get some free money while doing so!
What are the benefits of joining a decentralized autonomous organization?
Thanks to blockchain technology, crypto Dao’s offer several benefits that other corporate structures don’t. Some of those benefits include; Decentralized leadership: With a crypto Dao, no one leader can wield too much power over its members. That’s because all leaders (if they exist at all) are distributed across many nodes on its network. Another benefit of decentralized organizations is that they aren’t legally based in any one location or country. And since there isn’t a physical address, members can also take advantage of a number of privacy and security benefits.
Decentralized organizations also benefit from disintermediation, which means their relationships with other institutions are based on trust. Since there’s no need for a central bank or intermediary, members don’t have to worry about what happens if their crypto Dao gets shut down by an outside force. Additionally, decentralized crypto DaOs don’t exist on any single server, which means they can’t get hacked and can’t lose your valuable data. For example, The DAO was a decentralized autonomous organization that was created specifically to act as a virtual venture capital fund. It raised more than $150 million worth of bitcoin and Ether before a hacker stole $50 million worth of digital currency by exploiting vulnerabilities in its code.
There are also a number of other benefits that decentralized organizations offer over traditional corporations. For example, they don’t have debt and can only spend members’ money if enough of them agree to it. That lack of debt means that most don’t pay interest or have credit limits and so won’t accrue any kind of debt. Additionally, there are no board meetings and no corporate offices, so members save on office space and utilities. What do you think about crypto DaOs? Please leave your thoughts below. Thank you for reading!
The Future of DAO investing
The Next Big Thing in Crypto is crypto DAOs. But what exactly is crypto-DAOs? How do they work? And why might they be an incredibly lucrative investment opportunity? We’ll answer these questions and more below. For those who don’t know, a DAO stands for decentralized autonomous organization. The key characteristics of a DAO are that
- it exists as decentralized computer code, and
- its operations are governed by programming rather than by individuals.
How does a crypto-DAO work? Imagine an investment fund that has no humans involved in making investment decisions. Instead, it’s completely programmed to invest based on certain parameters that have been set. Let’s take an example: let’s say we have an Ethereum-based crypto-DAO whose sole purpose is to invest exclusively in real estate properties. The programming would simply state that any profit made from buying and selling properties would go into purchasing more property. That way, as soon as there was money available for reinvestment (which could happen after weeks or months), it would be automatically reinvested into more property without anyone having to manually intervene.
So why are crypto-DAOs such a good investment opportunity? Consider for a moment that several blockchain projects that seek to tokenize real-world assets, such as companies or even governments, are already underway. Given the maturity of these platforms, we can expect more and more people to begin developing crypto-DAOs for other purposes as well. When a lot of these Daos come into existence, what do you think will happen? It’s obvious: people will start investing heavily in them (as they’re known to be solid investments), which will push their value higher and higher.