Decentralized Autonomous Organizations—or DAOs—are groups based on open source code that are unaffiliated with any nation-state and act as a form of venture capitalism but without the potential manipulation of investor funds, a board of directors, or any typical management structure. Put another way, DAOs are internet communities that share a bank account.

While the first DAO launched in 2016, DAOs remain a hot topic in the cryptosphere and could be poised to significantly revolutionize crypto for years to come. Here we review DAOs and their current impact on cryptocurrencies in the past, present, and future.

DAO Early Years

In 2016, a group of developers came up with the idea for the DAO, which was initially intended to be a free organization that would automate and facilitate cryptocurrency decisions and transactions. However, shortly after its inception, the DAO was subject to attacks, hackers, and other errors, culminating with a cyber attack in which hackers were able to snag a cool 3.6 million worth of ETH, the network on which the DAO ran its operation.

Following the attack, the DAO was in turmoil with many people calling for it to be disbanded, while others were trying to figure out a way to address the hack. Ultimately, due to the security breach, the fact that the DAO was venturing into uncharted territory within the cryptosphere, and lingering concerns regarding its stability, the DAO token was delisted, signifying the beginning of the end.

DAOs In The Present 

Following the delisting of the DAO token, the idea for a rebirth of what the organization can be stands largely at an impasse. But despite the lack of forward progress, there remains a wide spectrum of interest in DAOs and what they mean for the future of crypto.

The cryptocurrency Dash, for example, currently typifies how a DAO can be run successfully, since Dash remains a popular coin and has been proven to be relatively stable as far as cryptos are concerned. There’s hope that Dash’s autonomous system of governing and its budgeting system structure can provide a blueprint for other DAOs to follow moving forward.

The Future of DAOs

The future surrounding DAOs is quite murky and extremely uncertain. Lingering concerns over structure, security, and operational legalities continue to prevent any widespread adoption of DAOs, though the push and desire for them exists, and there’s speculation that DAOs will eventually replace traditional financial institutions in the not too distant future.

Recently, DAOs like PleasrDAO are making headlines for purchasing the only-copy-in-existence Wu-Tang Clan album for $4 million. It’s groups like PleasrDAO that are showcasing how DAOs can act like traditional funds, but in this case, can be a group of individuals focused on a specific—or a set of specific—financial goals.

Getting involved with DAOs

If you’re looking to dip your toes into the DAO atmosphere, think of DAOs as the crypto sister to the LLC. Instead of company founders sharing and splitting equity, a new trend could be that founders take tokens and use a DAO structure of governance. Forming as a DAO also gives potential new companies an advantage in that they can be run worldwide by a group of disparate individuals in a way that the legalities of traditional corporate structures would never allow. Institutional investment in DAOs is also a new way to get involved, so if you’re not looking to start your own DAO or join an existing DAO, linking with or contributing to a company that is getting into the DAO space could be your ticket to the DAO party.

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