Let’s Talk About the Radical Decentralized Autonomous Organization and the Cyber Attack
What does DAO refer to?
The DAO was created in 2016 by a group of coders and developers. It stands for decentralized autonomous organization. DAO refers to a system of networks that are divided amongst users, computers, networks and nodes. Nodes are computer networks connected to the blockchain. The word autonomous refers to the system being self sufficient, so not only is it not controlled by a single institution it is sovereign.
What was its initial purpose?
The DAO was a form of a venture capital fund aimed to be totally decentralized using Ethereum’s cryptocurrency Ether. The purpose of DAO was to eliminate human manipulation and influence on the market. Anonymous participants could invest money and would receive voting rights and tokens in exchange, initially becoming owners of the DAO. The initial investment process raised over 150 million dollars and was said to be the largest online crowdfunding campaign of the time.
What happened next?
In June of 2016 a group of hackers attacked the network and stole more than 3.6 million Ether (worth 50 million dollars at the time). This hack is what led to the hard forking of Ethereum which you can read more about here. The main reason for the hack was the vulnerability to programming and attack vectors. DAO was very radical about regulations and corporate law in terms of decentralized autonomy, stepping too closely on the centralized regulations in place. What followed the hack was investors pulling out and digital wallets delisting DAO from exchanges, and slowly DAO came to an end. Nonetheless it was a radical movement towards a decentralized future.
Today decentralized autonomous organizations exist in the forms of cryptocurrencies such as dash and dogecoin.
The Chinese philosophy, daoism, empathizes living in perfect harmony Tao. Tao is the source of everything that exists. One of Daoism’s core beliefs includes the wu wei, this refers to non-action or a natural action. When everything is inline, functioning in a balance, everything is as it should be and one can be contemptuous. Similarly with decentralised autonomous organizations, all the codes, networks and technicalities need to be working in harmony. That is why DAO was able to be hacked, because there were loopholes within the system, but due to these loopholes innovative developers were able to learn and fix these problems. Ensuring that networks function in better harmony today. The first hard forking of Ethereum is a great example of this!
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