Can’t we all get along? That was a catchphrase in the 1990s, but something we still need to ask ourselves today. When we try to accomplish things in today’s society, frequently the human element tends to get in the way.
In Congress, our representatives have the best intentions, but they are humans just as we are. They want to get re-elected just as much as the next person, so they sometimes make decisions that favor what’s best for themselves. It is human nature.
So how can we fix this if we are all humans? Well, you keep the voting element of society yet remove the human factors? Huh? Enter Decentralized Autonomous Organisations (DAOs), which are another reason for us to be bullish on cryptocurrencies.
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Before we dig into DAOs, I welcome everyone back to the CryptoCurrency 101 Series (101, 102, 103, 104, 105, 106, 107). The goal of this series is for us to obtain a basic investing thesis on cryptocurrencies. Okay, back to DAOs.
What are DAOs? DAOs are member-owned communities without centralized leadership. Sounds funny, but imagine a business without a CEO or a country without a president. Well, you probably couldn’t run these without their respective leadership, but there are many things that we can do with a central leader.
Let’s say we were running a non-profit charity that supports a different African country every month. We would each donate, say $10 a month, to the charity. Every month we would receive a flyer with available countries to support. Then we would vote. However, the voting took place; smart contracts would execute the plan of action.
Now, how would the votes be weighted? For most DAOs, you purchase coins to become voting members. The person with the most coins has the most weight. So if there were 100 tokens of Josh Coins, and I owned 70 of them, I would have a 70% share of the vote.
The good part is that we can set smart contracts to execute any plan we deem necessary as a collective. In the above example, we can state that we need a 90% majority to implement whatever schedule we are voting on. That way, Josh doesn’t win every single vote.
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That’s right, in DAOs, we also vote on the bylaws of the organization. So, as a collective, we can decide what the rules are from the start and adjust them as required by voting.
DAOs will be vital to the new future of decentralized finance (DeFi) and other charities and venture funding. I believe we will start to remove some of the human-based decisions that have bogged down the political, banking, and business systems across the globe.
DAOs will be vital to deciding how people want to direct their money as a collective, so look for DAOs to extend from the crypto space to the main street. We all do a lot of voting with our dollars, even daily.
When we get a Girl Scouts Cookies catalog, we vote by purchasing the ones we want. When we buy new smartphones, we are deciding what features we want to see the most.
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What if Samsung released new voting coins that would help users vote on the features they wanted to see on their new phones. For hardcore users, that may be worth the price of the coins to have a voice in these decisions. Once the vote took place, the smart contract would release the money to fund the winning features.
Again, I don’t know if this is possible in today’s version of DAOs, but a large part of cryptocurrencies is speculating. The more you can dream of a crypto future, the larger your investing thesis should become.
Crypto markets are still down, and we need to remain vigilant in our pursuit of a crypto future. In the 1990s, we didn’t know what the internet would become. I believe we are on the same timeline in the crypto-verse.
DAOs will become a more significant part of society once we see the benefits of extracting the human (i.e. political) side of organizations. We want our organizations to be as effective, efficient, and honest as possible.
Using smart contracts, tokens, and bylaws, DAOs will set a precedent of transparency that we currently do not have. For more on DAOs, please read a great article on ethereum.org. Good Luck and see you next time!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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