A DAO is an organization that belongs to a “community” of some form, an organization created by a group of like-minded individuals and managed through the use of computer algorithms. One might think of the DAO as democracy by algorithm; the software allows the members of the community to make decisions together. That is, DAOs are member-owned and member-managed communities, in which everyone has a say in how the organization is operated; there is no “central government,” although members can vote to put particular individuals into positions of authority and management (and to remove them).
DAOs are also intended to be transparent; as decisions are stored on the blockchain, anyone can “look into the blockchain” and see what’s going on.
DAOs use blockchains as a form of record keeping. All organization rules and amendments are stored on the blockchain, as are records of votes and decisions.
DAOs are a natural extension of the Internet. The Internet allowed people to come together online, to build new communities, in ways that are simply not possible offline. Communities that locally would be small could be huge online, and communities that simply wouldn’t be possible locally—because the interest is too uncommon—could, online, build communities of thousands. (Consider synesthetes: with just one person in a million with synesthesia, pre-Internet synesthetes lived in isolation; today they have communities of thousands.)
So, the first step in the growth of Internet communities was simply to come together and talk; to learn from each other, to exchange information, to socialize with like-minded people. The next step was to come together and do something, to take some kind of action, though semi-independently. For instance, numerous crowdfunding tools around the world (such as GoFundMe, Indiegogo, Kickstarter, etc.) allowed such communities to raise funds for projects they believed in.
But the next step is to organize. Using DAO technology, communities can create actual organizations—indeed, even corporations (Wyoming is the first governmental region in the US to provide a mechanism for DAOs to create legally recognized corporations)—that members of the community can take part in, can steer, can, in effect, own.
“You have had internet forums before where there are debates and you can feel part of a community. But [with DAOs], you don’t just get a sense of ownership. You actually do own part of the platform, and your votes have a direct effect on it. That is the beauty of it to me.”
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