[Valentine]

It's pretty incredible to see just how quickly blockchain technology has evolved.

It was initially just used as a currency with Bitcoin, now it's the basis for smart contracts, distributed computing, decentralised currency exchanges and new usecases are being created every day.

One major usecase, or perhaps an evolution of blockchain technology is in acting as a Decentralised Autonomous Organisation (DAO).

It's basically an extension of blockchain smart contract technology which has feature of Decentralized Governance by Blockchain (DGBB) - which means token holders can vote on the smart contracts which run on the blockchain.

For example let's look at a smart contract made for corporate management. Does your sales employee reach a sales target of $120k for the year? Automatically give him a $15k raise. Does he reach $30k or less? Then fire him (note: you need ChainLink or some other oracle/middleware to give a smart contract this info unless they're already selling/being paid directly via the blockchain).

But smart contracts by themselves are centralised in control - only the smart contract creator can set the rules. A DAO on the other hand allows token holders to vote on the smart contracts which exist - for example a token holder could make a proposal of increasing the raise to $25k in this instance, which all token holders can then vote on and if it passes then the smart contract would be updated accordingly.

The applications of DAOs are huge but this introductory post would be remiss if the failure of the first DAO wasn't mentioned.

The first DAO (aptly named "The DAO") was the biggest crowdfunded project ever (it raised $150 million) when it launched in 2016 but ultimately failed because of human error in writing the code.

It had several major security holes which allowed a hacker to steal millions before a consensus was reached in the community and a hard fork was executed to roll back these illegitimate transactions. This hard fork in the chain is why both Ethereum and Ethereum Classic exist today.

The community has been cautious to take the dive back into DAOs but there are several successful DAOs still running.

Dash is #6 in cryptocurrency market cap (>$2.5 billion) and it's an example of a successful DAO.

With Dash 10% of block rewards are reserved for the treasury, which is a decentralised fund used to pay for projects which benefit Dash. How the funding is spent is decided by their DGBB, which is a treasury system that allows consensus to be reached based on whatever proposals people put forth. The decentralised voting in this system has resulted in the hiring of 50+ employees, websites, marketing, research & development, integrations with APIs, conference events etc.

This is a huge success for transparency in business, and these employees benefit from being paid by their decentralised employer anonymously and instantly thanks to Dash's PrivateSend and InstantSend features.

DAOs are also an extremely powerful basis for other organisations.

More coming soon.

[RatInTheWoods]

This is amazing, thanks for the update.

[Cattle Rustler]

This read more like a copy/paste shill article promoting DASH than an actual post/thread :/

[Valentine]

I don't hold Dash, just simply admire their technological foundation. I guess you can't discuss any cryptocurrency these days without people thinking you are a shill though.

I created this intro post to see if there was any interest in this topic because crypto takes a long time to learn as well in explaining, if there's more interest in the topic then I'll follow up with some more info.

[Brodiaga]

(09-21-2017 04:44 PM)Valentine Wrote:  

For example let's look at a smart contract made for corporate management. Does your sales employee reach a sales target of $120k for the year? Automatically give him a $15k raise. Does he reach $30k or less? Then fire him (note: you need ChainLink or some other oracle/middleware to give a smart contract this info unless they're already selling/being paid directly via the blockchain).

I believe smart contracts have use cases, but I don't think corporate management is one of them.

As my accounting professor used to say, you can't solve business problems using an algorithm.

Let's take the salesman example. If I am a salesman with an automatic $120K smart contract sales goal, I can do a number of things to game the system:

-Screw over other salesmen by getting the best leads and sharing my bonus with whoever provides these leads, paying him in cash for giving me better leads,
-Use client's lack of knowledge about the product to sell to clients who don't need the product in the first place and are likely to return it and ask for a refund later,
-Fake contracts with clients unless the system is smart enough to distinguish between real and fake sales,
..the list goes on.

My point is that in corporate management, specific quantitative targets have to be combined with human judgement, otherwise they can and will be gamed. Also, in sales, at least it's possible to set objective and quantifiable goals. For most employees in other business functions, even that's not an option.

This is a general limitation of smart contracts, not just in the business environment. Many contract obligations are too complex to be tracked and more importantly, enforced by an algorithm. That's why we have expensive lawyers and judges in the legal system and corporate managers in business.

[Valentine]

(09-22-2017 07:30 PM)Brodiaga Wrote:  

This is a general limitation of smart contracts, not just in the business environment. Many contract obligations are too complex to be tracked and more importantly, enforced by an algorithm. That's why we have expensive lawyers and judges in the legal system and corporate managers in business.

Keep in mind that it would tend to be only the higher financial payouts where the additional human component is desirable. You could always do a smart contract that acts like a smart escrow + arbitration process, whereby a 3rd-party such as a manager has to give the final go-ahead for the smart contract to be complete and the raise to be given.

If you were instead doing lots of micro-transactions (e.g. like OMG currency exchange) then no human oversight is preferable in order to scale. In the context of corporate management this could be per-sale commission for each salesman in a large enterprise.

Of course the system can be gamed (just like commissions can be gamed in a non-smart contract payment system) but I expect to see many businesses utilising smart contracts in order to become more efficient in the future.

This will likely initially be for rather simple smart contracts (e.g. monthly payroll just like Dash does) in order to avoid abuse but as corporate smart contract expertise grows the amount of functions that smart contracts take over I think will surprise us all.