If you’re slightly interested in Bitcoin and related technology you have probably heard about The DAO, Decentralized Autonomous Organization. Curious to know more, I’ve read the whitepaper on The Dao website, Ethereum.org on DAO, as well as the code of the smart contracts, freely accessible on Github.
Based on my understanding from what I’ve now read, The DAO is in a way a token contract on steroids. For those that don’t know what a token is: that’s another word for coin and similar to a coupon or share. Creating a token is very easy with Ethereum, by creating a token contract. The only challenge is getting people to accept your token and attach a certain value to it.
Bitcoin have value because it allows you use the vast Bitcoin network, Ether has value because it allows you to use Ethereum. Digix, a novel token on top of Ethereum, have value because they’re backed by gold.
Similarly DAOs have value because they’re backed by the Ether for which they have been bought and the value of the executed proposals (~ projects) TheDao is doing. That’s what novel about having DAO-tokens: they allow you to create and/or vote on proposals for investment, or more generally anyway to make money grow.
Once you’ve bought DAOs, they’re are locked until the DAO sale is over. What happen after that is a bit unknown. Contrary to what’s sometimes suggested, TheDao is not a crowdfund. Rather, by participating in TheDao you can create and fund proposals, vote for proposals or trade the DAOs you have. You can also just sell them and getting most — or if your lucky even more — of your funding back. Lastly, you can also do nothing, but if most people will do that TheDao will most likely fall apart.
Not wanting to stay behind I’ve bought a few DAOs too.
First I’ve downloaded the Ethereum Wallet, an application you can run on your computer. When you run Ethereum Wallet for the first time, it’ll have to download the entire Ethereum blockchain. This can take over a few hours, be sure to have a fast internet connection.
After you create an account. Be sure to follow the instructions to backup the account key, because else there’s no way to retrieve your account in case you loose your data.
I’ve bought a few Ether as you can see. I also created a Wallet Contract as this supposed to give you more functionality. I don’t think that’s necessary, but it’s quite easy to do. Again, be sure to follow the instructions to backup the address.
After that I’ve clicked the Wizard button on Daohub website to start depositing. Having the Ethereum Wallet, the only thing I had to do is copy the address of TheDao that is displayed on the site.
Back in in the Etherum Wallet, using the Deposit button I could transfer some of my Ether to TheDao.
While the transactions were getting confirmed…
I went back to TheDao hub website to check my balance, by copy & pasting my Ethereum Wallet’s address into their web interface. At first the balance remained zero which was kind of scary. After a short while, I think within a minute, the balance was updated:
So, now I just have to wait for the DAO sale to end. While waiting, I’ll be busy with Plutus, a humble startup I’m trying to get off the ground.