Decentralized Autonomous Organizations & Their Social Implications

With our increasingly digital world, new innovations indicate that we are in a time of change. More specifically, we are living in a world where the very systems upon which trust is based are being challenged by new and exciting paradigm shifts. Decentralized autonomous organizations (DAOs), deriving from organizational decentralization, will be a major driver of these changes and have a variety of social implications.

Decentralization may impact companies, governments, or any variety of organizations. No matter the societal sphere, essentially, decentralization involves the delegation of tasks from one branch (usually an authoritative position) to other branches. In business, this could mean a structure where the upper level management delegates responsibilities to others in the company.  Similarly, in government, this could involve the central government transferring some or all authority to other branches or sectors of government. While the idea of decentralized organizations is not new, the technological revolution, spurred by the advent of blockchain, has allowed for a new kind of decentralization, namely decentralized autonomous organizations. A DAO is a “vast system (or a system with the potential to become vast) that adapts to user needs, tracks spending and preferences, and disperses profits without centralized oversight.” Blockchain has given ultimate control to the code, where even those who operate the blockchain have limited power. Decentralized autonomous organizations, therefore, have the ability to “realign the interest of users, reduce friction and remove middlemen.” Put another way, blockchain eliminates hierarchies while retaining the benefits of centralization such as simplicity and convenience. This new flow of value, which decentralized autonomous organizations allow, will transform into social responsibility banks that individuals will manage and share via devices that they will develop. People will tire of “thing happening to them” and will create like-minded tribes using technology to further democratize the world around them.

However, before postulating the social implications of DAOs, it is important to ground the hypotheses in the current impacts of organizational decentralization. For example, in business, some advantages include giving employees more freedom and power while simultaneously lightening the load for business leaders, setting up better decision making, and allowing for growth with separate branches in different locations. Meanwhile, the impacts of organizational decentralization for governments can include giving the people more power, and economic impacts include privatization and deregulation. Essentially, as the name suggests, decentralization allows for more collaboration as the idea of one person or entity controlling everything is erased.

We have several key factors driving decentralization, such as blockchain, 5G technology and the Internet of Things; These innovations allow for the creation of DAOs, which, in effect, possess their own identities and data; they will be able to communicate with each other without human intervention.

At a social level, the development of so-called smart cities will drive the exchange of data across domains that include public-private sectors. Healthcare and tokenizing the asset of your health data such that it brings value to you will become even more pivotal, perhaps challenging the very healthcare insurance entities that we know today. Community activism will overshadow that which we know as a state; these twenty-first century communities will be independent creating and sharing their own forms of energy, developing their own micro-economies in the form of healthcare, transportation, and education among others. DAOs also offer the promise of tokenizing an asset such as the climate, the ocean, or other natural occurrences. Funding for any and all of these initiatives will be a Social Responsibility tax, which will not be a collected fee per se, but transparently executed via action like planting trees, and eradicating status such as under-employment and unemployment.

While these changes may not happen in the immediate future, we will eventually see people band together and use technology democratize their world. The question which remains now, is how far away are we from the creation of the like-minded tribes that will usher in this new reality of decentralized autonomous organizations?