De-Mystifying The Language of the Blockchain

Part 1 — Distributed Autonomous Organizations — You Are Here
Part 2 — dApps
Part 3 — Protocols
Part 3 — Tokenization

If You’re confused by Blockchain. I Get It.

If your eyes have ever glazed over when evangelists like me start blabbering on about Distributed Ledgers, DAOs, dApps, Protocols, Tokenizations, or any of the others that get thrown around, and thought to yourself: WTF is he talking about? You are not alone.

Remember those famous news clips of respected news anchors asking:

“What is internet anyway?”

“That little @ with the ring around it”

“Alison, can you explain what internet is”?

Sometimes technology makes such a big a jump forward that we need new words. We dont have the commonly spoken words to describe something that hasn’t existed until now. In the case of e-mail there is a hyper-common real world analog. It is quite literally electronic-mail.

But, in the case of Blockchain we didn’t get so lucky with the language.

A second (and arguably bigger) problem is that the words we DO chose are hyper-technical, and make absolutely no sense to most people.Tech people need to be as specific as possible (I’m guilty of this too) when we are building something.

To make things just a little (sarcstic) easier, a LOT of the new words mean something similar to each other. People end up using them interchangeably, which makes it even harder to wrap your head around whats going on.

With that in mind, I’ll try to break the words and concepts down in a way that might not be entirely technically accurate, but in a way that will actually make sense to anyone who finds this post. Even my mom.

A DAO, dApp, and Protocol can all be a Smart Contract?

Are You F***ing Kidding Me?

That makes things easy, right? Just Kidding :)

First let’s tackle what a DAO is then we can get into dApps & then we will cover Smart Contracts, Protocols and how it all fits together.

Distributed Autonomous Organization (DAO)

When most of us think of Blockchain we think of Money. But, one of the other major breakthroughs is the ability to easily, verifiably, remotely, and electronically vote on anything under the sun.

That even includes ‘What should company XYZ focus their resources on next?”.

When we buy shares in a company, we rarely excersize the right to vote with those shares. We usually defer the voting rights to someone else who has a better more intimate knowledge of the business. But, it’s not only because we think they know better, it’s because voting from a distance has unique rules.

When we own a voting right on the Blockchain, voting can be as simple as a single click.

In a Blockchain scenario, where the business is facilitated by a Token or a Cryptocurrency, the business may not even need a bank account to operate. It could accept Bitcoin and Ethereum as payment from its customers, and pay it’s contributors in the same coins.

Now, since we need no ‘organization space’ (aka office) to operate, we dont need a bank account to exist, and employees/stake holders can gain value in their electornic wallet, what do we actually need the business organization for? The only answer left is:
To make decisions about the direction of the company, and assign/track/reward the people responsible for the execution of the plan.

In any business, the organization is governed by rules. In a Distributed Autonomous Organization, the rules are written as executable code.

But Zack, what does that mean?
Think of an HR Admin. A person actually enforces rules like:
Employees may only take PTO on 10 business days in a row

In an HR App, those rules are enforced in code:
If the request is greater than 10 days in a row, reject the request with a message like: ‘You may only take 10 days in a row without approval’

Since the code enforces the rules. To change the rules we need to change the code. And a change in the rules (code) can be proposed to the stakeholders as a vote.

Actually, anything at all can be proposed as a vote for the stakeholders.

Who should we hire as the Marketing Manager?
How much should that role get paid?
Are we offering earned tokens (BSV, ETH) or Native Tokens (our companies token)?
Is that payment minted or from reserves?
Who has been voted the power to hire?
Is it a democratic org wide vote to hire, or a democratic vote to appoint a person (or committee) in charge of directly hiring the person?
How is someone fired?
Are their incentives earned to date, paid out when someone has been voted out?

You get the idea…

In this organizational model, all we really need to know upfront is:

What are the public addresses (Blockchain Bank Account) for payment to/from the DAO?
What is the process for proposing a vote?
How is the vote counted?
1 Coin = 1 vote?
1 Address = 1 vote?

Will we need to be able to create more Tokens in the future? Or are we starting with a fixed supply in an Escrow Account?

Once the rules of governance are in place, the minimum elements of an “Organization” have been met.

It has:

A Defined group of stakeholders
A Mechanism for reaching agreements on proposals
A Mechanism for accepting and sending value (currency)
Mechanisms for securely making approved 3rd party payments.

So what makes it a Distributed Autonomous Organization?

✅ It’s Ownership is not Centralized in any Location, Organization, or Person.

✅ The Organization can make decisions on it’s own (proposals & votes)

✅ The Organization can maintain its own value & funds without a centralized banking partner.

Now that we have a good idea of what a DAO is we can move on to

Part 2 — dApps coming soon….

CTO & Lead Engineer @ & |Find @DevelopingZack on Twitter & Telegram