Decentralized Autonomous Organization (DAO) — The Future of Governments?

As we prime ourselves to enter the third decade of the 21st century, we ask ourselves a difficult question. Where to from here? If we look at the technological advances in the last couple of decades they seem terrifying to say the least. For one, who could have thought even in their wildest dreams that one day we would be using an unregulated currency that you cannot see, smell or touch. It’s just there and you have to take someone’s word for it. It’s the stuff of nightmares for people in power. And the common individual is thinking, “What next?” I’d like to answer it with “Democracy on the blockchain!

Blockchain technology is being hailed as the enabler of great things to come. At the heart of the blockchain technology are “smart contracts.” Smart contracts are, in layman’s terms, pre-programed rules that describe the activities of a system. Among other things, smart contracts can be used to effectively “run” a system on its own. This means that we can set rules like a computer program and the system will run on its own. The only difference here is that the “system” is far bigger and exponentially more complex than a computer. Here, the system is an entire government!

Is it even possible? Sure, it is. If bitcoin can revolutionize the financial system and do away with intermediaries, why can’t an organization do away with a hierarchical system and operate independently without any need for human management? This isn’t a new idea. It was propounded by crypto thought leader Mike Hearn immediately after the release of bitcoin in late 2009. The idea that an autonomous organization can be hard-coded with a set of rules that can effectively help an organization (say, a company, for example) to run effectively on its own has gained momentum since.

The earliest experiment to create a decentralized autonomous organization (DAO) started and, unfortunately, failed in 2016. In fact, its success would have been hard to imagine so its failure did not come as a shock. However, it laid the foundation for the idea that this could work. What was needed was to make the idea more robust and more foolproof. A DAO was created with a set of pre-defined rules using smart contracts on a blockchain. Anyone with an internet connection can join the DAO. All DAO participants are given DAO tokens. The participants can then vote on which projects to “fund.” If I have a unique program that can help the DAO grow and prosper, I can put forth my “proposal” in front of the DAO participants. If participants find value in my project, they will “crowdfund” my project with DAO tokens. This means that a DAO funds its own growth and everyone is accountable to it.

A DAO is a unique way to guarantee democracy cryptographically where all “partners” (participants or stakeholders) can vote on adding new rules or change existing rules and create consensus (like voting in a democracy) to fund projects or for any other activity that pertains to the betterment of the DAO.

So why did the initial experiment with the DAO fail? Security. At the heart of a DAO is an immutable code. So once the smart contracts are deployed onto the blockchain, they are difficult to change. This is good, to an extent, as a single person cannot tamper with the rules. However, if there is a bug and its gets discovered, it becomes extremely difficult for developers to change the code. The first DAO was hacked and attackers siphoned off millions of dollars. The lead developers at Ethereum, however, reversed the transaction history to return the funds to their legitimate owners. But this action created a rift in the community and the project collapsed.

The failure notwithstanding, the basic idea behind a DAO is too exciting to be shelved as a dream. With technological advancements and more robust security measures, this can become a valid idea to run an organization, even a government, without human intervention. What can this do? It can free up precious resources that can be used for the betterment of citizens by providing utility services to the people.

Enter “Borderless — A Governance Platform and Charity for a Global Society.” As the name suggests, it is a governance model that can substantially lower the costs of running a nation state. This allows freeing up of precious resources that can be allocated smartly. It also introduces competition into the age-old government monopolies.

Humongous amounts of money and other resources are used in setting up and enforcing countless rules and laws that are different in different nations. Using smart contracts, rules and laws can be predefined and run using EDCCs, or executable distributed code contracts. EDCCs are the simplest form of decentralized automation. These are small computer programs whose sole purpose is to faithfully enforce contracts in an unbiased manner. These codes can be trusted because they cannot be altered and they won’t do anything other than what they were programed to do.

The features of what Borderless can do are a matter of discussion for later. But what is exciting is that it is a firm step towards what a decentralized autonomous organization can do and achieve. It has the potential to create a new form of sociality, better than what Marx and Engels could have imagined. And it has the power to revolutionize the way in which people and communities can connect and communicate. It is a governance model where nobody can lie, steal or cheat.

An example of what a DAO can achieve can be seen in the efforts of Dash that is fighting inflation in Zimbabwe with cryptocurrency. By providing Zimbabweans their first peer-to-peer localized cryptocurrency payment service, Dash is endeavoring to reduce the country’s ballooning inflation and a declining economy [1].

Problems and hiccups will arise and naysayers will abound. But the future is nigh. We are here to witness something radical. The fall (or maybe an evolution of a Westphalian State) and a complete overhaul of the governmental system is inevitable. It will usher in an era that was the stuff of dreams and the vision of our Founding Fathers. Equality in the truest, most unadulterated, sense of the term will become a reality. Experiments in the DAO and similar entities is in progress in many shapes and sizes even as we speak. Technology always follows the endeavors of human imagination. History is replete with stories that tell us how technological advancements made human imagination possible. If we imagine a governance model, howsoever inadequate it might seem now, rest assured that it is only a matter of time before technology makes it possible. Democracy on a blockchain is very much possible. Stay tuned for more on what Borderless is all about and how it will redefine the way a government should and could work.

References –

  1. https://www.dash.org/2017/11/23/KuvaCash.html
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