Introduction to Decentralized Autonomous Organization (DAO)
Since the Bitcoin came into the light almost a decade ago, we have seen various uses of blockchain which is the basic building block of any cryptocurrency. After the huge success of bitcoin, many developers worked day and night to bring innovative ideas on the table using the blockchain technology. That’s when Ethereum was introduced, to add and enhance what was missing from the bitcoin. Ethereum gave a chance to the developers to create their applications on Ethereum blockchain, and automate all tasks using Smart Contracts. This gave birth to the Decentralized Autonomous Organization (DAO).
DAO brought the concept of an organization that operates on its own and makes decisions based on just the computer code (smart contract). It reduces or somehow limits the need for a human being to operate a company. It eliminates the need for intermediaries and is fully automated. DAO operates via a network of smart contracts linked with each other and makes decisions based on the established rules. Many businesses like ride-sharing companies, the healthcare industry can take advantage of this kind of decentralized operating structure.
The famous ‘DAO’ Hack
As powerful as this technology may seem, it does have its own flaws. As we know that blockchain is immutable, which is what makes it so secure. A smart contract also resides on blockchain and if it contains flawed code, it can create more problems than it can solve. This is what happened to “The DAO” which was a decentralized company based on Ethereum Network. They were successful in raising more than $150M in its crowd sale.
The platform was considered a success as it managed to raise a huge amount., but it was lacked security. On 18th June, a hacker found a vulnerability in its code and managed to steal 3.6m of Ether. After the incident, the price of Ether went down from $20 to less than $13. This event raised questions regarding the security of the DAO operating on Ethereum platform. It was a huge setback for the industry, but it doesn’t mean that these problems can’t be avoided. If the development team work together and show serious dedication, the future of DAO looks promising.
DAO can be useful in many fields like asset ownership tracking, trade financing, digital identity provision, supply chain traceability. We can also see the possibility of implementing it in self-driving cars in the future. We have seen in the past that every new technology has its downsides but they have improved over time. So, we can hope the same future for it.