tag:theconversation.com,2011:/us/topics/dao-27361/articlesDAO – The Conversation2018-01-22T05:28:33Ztag:theconversation.com,2011:article/902242018-01-22T05:28:33Z2018-01-22T05:28:33ZWhy Bitcoin is taken more seriously than Dogecoin<figure><img src="https://images.theconversation.com/files/202772/original/file-20180122-110106-b887fx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A Dogecoin, featuring the likeness of a Shiba Inu dog</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>As Bitcoin loses value, it may seem like it’s just as useful as the cryptocurrency invented for a joke - <a href="http://dogecoin.com/">Dogecoin</a>. But there are genuine differences between these cryptocurrencies, and it’s not just because one is “<a href="http://knowyourmeme.com/memes/doge">much currency, such volatility</a>”.</p>
<p>There are 1,448 cryptocurrencies around the world, <a href="https://coinmarketcap.com/">by some counts</a>. For every Bitcoin you have a programmable coin like <a href="https://www.ethereum.org/">Ethereum</a>, or a coin that acts like a token for specific services, like <a href="http://www.augur.net/">Augur</a>.</p>
<p>Some of these coins earn better reputations because of their usefulness, the people who made them, or the tech itself. They are not all taken seriously by investors, researchers and users.</p>
<p>The developers behind these cryptocurrencies are also important as they convince other people to adopt them and write new code for the technology to evolve. This new tech attracts new users into the system.</p>
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<a href="https://theconversation.com/coinye-west-to-nyancoin-how-to-build-your-own-cryptocurrency-22185">Coinye West to Nyancoin ... how to build your own cryptocurrency</a>
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<h2>Different functions</h2>
<p>Cryptocurrencies can be divided into several types. Cryptocurrencies like Bitcoin, <a href="https://litecoin.com/">Litecoin</a>, and <a href="http://dogecoin.com/">Dogecoin</a> only provide basic functions such as transferring value from one party to another. </p>
<p>The next category are smart contract cryptocurrencies like <a href="https://ethereum.org/">Ethereum</a>, <a href="https://www.cardanohub.org/en/home/">Cardano</a>, <a href="https://neo.org/">NEO</a>, and <a href="https://wavesplatform.com/">Waves</a>. These cryptocurrencies can be programmed, and so can become the basis for applications like games and digital markets. </p>
<p>The third type are cryptocurrencies designed to preserve your privacy like <a href="https://getmonero.org/">Monero</a> and <a href="https://z.cash/">Zcash</a>. These claim to be “untraceable” although transaction records are still available.</p>
<p>Then there are <a href="https://news.earn.com/thoughts-on-tokens-436109aabcbe">tokens</a>, which are built with smart contracts to serve many purposes. They are often <a href="https://omg.omise.co/">sold to raise funds to build services</a>, and used as tickets for the services (such as <a href="http://www.augur.net/">Augur</a> and <a href="https://powerledger.io">Power Ledger</a>).</p>
<h2>Technological differences</h2>
<p>The differing technologies in these cryptocurrencies mean that certain coins have more potential than others. </p>
<p><a href="https://iota.org/">IOTA</a> is used for “Internet of Things” devices (such as a smart kettle). But it has a special kind of blockchain (the technology that tracks transactions) and so can achieve much higher speeds of transaction and quicker confirmation of trades than Bitcoin. </p>
<p>Others like <a href="https://nxtportal.org/">Nxt</a>, and <a href="https://www.ardorplatform.org/">Ardor</a> have <a href="https://nxtplatform.org/what-is-nxt/">built-in features</a> that let users to do other things than just sending coins, such as creating marketplaces and even messaging.</p>
<p>People use cryptocurrencies like <a href="https://z.cash/">Zcash</a> and <a href="https://getmonero.org/">Monero</a> to settle transactions with “zero-knowledge”. This means the cryptocurrencies hide the information of the real payers and payees, and even the amount of coins transacted.</p>
<p>Monero <a href="https://www.wired.com/2017/01/monero-drug-dealers-cryptocurrency-choice-fire/">has largely replaced</a> the use of Bitcoin in exchanges on the dark web. </p>
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Read more:
<a href="https://theconversation.com/kodakone-could-be-the-start-of-a-new-kind-of-intellectual-property-89966">KodakOne could be the start of a new kind of intellectual property</a>
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<p>And smart contracts built with cryptocurrencies like <a href="https://ethereum.org/">Ethereum</a> have countless potential usecases, from <a href="https://theconversation.com/how-the-blockchain-will-transform-housing-markets-75691">property transactions</a> to <a href="https://theconversation.com/the-dao-a-radical-experiment-that-could-be-the-future-of-decentralised-governance-59082">digital asset management</a> and <a href="https://wavesplatform.com/">fundraising</a>. </p>
<p>The technology also means that one cryptocurrency might use <a href="https://theconversation.com/the-utopian-currency-bitcoin-is-a-potentially-catastrophic-energy-guzzler-88871">significantly less electricity than another</a>.</p>
<h2>Limitations</h2>
<p>The major cryptocurrencies, like Bitcoin and Ethereum, are slow because of their inability to handle massive amount of data being sent by users. The technology used to secure the data are expensive and inefficient.</p>
<p>Bitcoin can only handle a maximum of <a href="https://due.com/blog/can-the-blockchain-scale/">seven transactions per second</a>; Ethereum can handle <a href="https://medium.com/@yobanjo/ethereum-wont-scale-like-you-ve-been-told-cae445bef539">15</a> transactions per second. Compare this with the VISA payment system, which can process <a href="http://www.altcointoday.com/bitcoin-ethereum-vs-visa-paypal-transactions-per-second/">up to 56,000 transactions per second</a>. </p>
<p>But new entrants, such as <a href="https://www.ccn.com/university-sydneys-red-belly-blockchain-scales-660000-transactionssec/">Red Belly</a> from the University of Sydney, might be able to solve this problem, handling up to 660,000 transactions per second.</p>
<p>Smart contracts can also run into problems if they contain bugs. When a decentralised organisation built on Ethereum <a href="https://www.bloomberg.com/features/2017-the-ether-thief/">was hacked</a> in 2016, US$50 million in Ether was stolen.</p>
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Read more:
<a href="https://theconversation.com/the-dao-a-radical-experiment-that-could-be-the-future-of-decentralised-governance-59082">The DAO: a radical experiment that could be the future of decentralised governance</a>
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<p>When something achieves the success of Bitcoin we’re bound to see competitors entering the market, hoping to grab a share.</p>
<p>This explains the <a href="https://coinmarketcap.com/">explosion</a> in cryptocurrencies since the <a href="https://github.com/bitcoin/bitcoin">Bitcoin source code</a> was released under an open licence. Anyone can copy, modify, and release a modified version of Bitcoin. </p>
<p>By looking at the current trend, we will see more cryptocoins in the near future.</p>
<p>But as we can see, “cryptocurrency” is a term that encompasses a wide range of different technologies, communities and uses. It’s all of these factors that inform whether users, investors, developers and researchers take a coin seriously.</p><img src="https://counter.theconversation.com/content/90224/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dimaz Wijaya receives funding from Monash University and Data61, CSIRO. </span></em></p>Cryptocurrencies encompass a wide range of technologies, communities and uses. Not all of them are taken seriously.Dimaz Wijaya, PhD Student, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/604032016-07-13T19:40:24Z2016-07-13T19:40:24ZIs the DAO the beginning of the end for the conventional chief executive?<figure><img src="https://images.theconversation.com/files/125784/original/image-20160608-3488-oqh12r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Could blockchain bring the traditional CEO unstuck?</span> <span class="attribution"><span class="source">Image sourced from shutterstock.com</span></span></figcaption></figure><p><em>Companies around the world are exploring blockchain, the technology underpinning digital currency bitcoin. In this <a href="https://theconversation.com/au/topics/blockchain-unleashed">Blockchain unleashed</a> series, we investigate the many possible use cases for the blockchain, from the novel to the transformative.</em></p>
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<p>Recently dubbed <a href="http://www.wired.com/2016/06/biggest-crowdfunding-project-ever-dao-mess/">“the biggest crowdfunding project ever”</a>, the <a href="https://daohub.org/">decentralised autonomous organisation (DAO)</a> is essentially an investment fund without humans making the investment decisions. </p>
<p>Established in April 2016, the DAO draws from the notion of a human-led organisation, but unlike traditional companies, is automated. <a href="http://infocoin.net/en/2016/05/18/dao-new-type-of-organizations-in-the-light-of-smart-contracts/">Formalised governance rules are enforced through software</a>, not a board of directors. </p>
<p>No one body owns or controls the DAO, and essentially everyone can take part. More than 10,000 have done so already, raising more than US$150 million for the fund. The DAO is not a physical entity, instead transactions and balances are kept on a public ledger which is sustained by enormous amounts of computing power coupled with the use of algorithms.</p>
<p>Instead of a hierarchical management structure managed and regulated by humans, the DAO is typified by the use of <a href="http://www.huffingtonpost.com/don-tapscott/what-you-need-to-know-abo_b_10264706.html">blockchain technology</a> which involves people interacting with each other according to a protocol specified in code. Blockchain technology is based on <a href="https://bitcoin.org/en/">Bitcoin</a> protocol, digital <a href="https://bitcoin.org/en/">open-source currency</a> which was generated in 2009. </p>
<p>With all of this technology working towards an automated entity, the DAO brings into question what the organisation of the future will look like. This question is especially prominent now, with the <a href="http://www.wired.com/2016/06/50-million-hack-just-showed-dao-human/">recent hacking attack on the DAO</a> leading some to wonder how the DAO will respond in restoring its finances and reputation. </p>
<h2>The algorithmic CEO</h2>
<p>The DAO clearly demonstrates the evolution of a revolutionary new type of firm. This raises the question of the role of management, in particular the CEO. If the majority of tasks can and will be performed by algorithms, supported by code, will conventional CEOs become a thing of the past? Could CEOs really become an <a href="http://www.inc.com/leigh-buchanan/why-robots-will-replace-ceos.html">endangered species</a>? </p>
<p><a href="http://www.bbc.co.uk/guides/z3whpv4">Algorithmic mathematical technology</a> has the potential to fundamentally change the way we do business, and has been flagged as the most <a href="http://fortune.com/2015/01/22/the-algorithmic-ceo/">prominent sweeping change</a> since the industrial revolution. </p>
<p>Still very much in its infancy, the application of algorithmic technology within business has however begun to take hold, and is most visible so far in the retailing sector. </p>
<p><a href="http://fortune.com/2012/07/30/amazons-recommendation-secret/">Amazon</a>, for example, uses algorithms to refine the accuracy of recommendations by predicting customer preferences. The power of algorithms is challenging and altering tried and true business models. It’s creating new opportunities for businesses to interact with consumers in much more personalised ways than ever before. </p>
<h2>The benefits of replacing CEOs with algorithms</h2>
<p>Algorithmic technology and machine-to-machine intervention may also help managers or CEOs to increase their capability and capacity and the speed of their decisions. </p>
<p>Algorithmic-based technology will be able take care of mundane and repetitive work – such as data entry or financial management, allowing <a href="https://www.entrepreneur.com/article/226397">entrepreneurs to be more creative</a> and entrepreneurial. More time could potentially be available for entrepreneurs to focus on tasks that are aligned with big picture and forward-thinking, innovation and creativity. </p>
<p>Imagine a CEO that could bridge international work days, across country markets, <a href="http://www.theguardian.com/commentisfree/2016/apr/07/robots-replacing-jobs-luddites-economics-labor">working 24 hours a day</a>. Or one that could handle cross-cultural sensitivities including communicating and translating in foreign markets. </p>
<p>How about a CFO that could avoid the computation errors that are more than likely to arise with any human involvement. </p>
<p>The potential use of algorithms to support business functions has seldom been explored or discussed, however there is <a href="http://www.inc.com/adam-fridman/6-ways-industries-are-disrupted-using-algorithms.html">enormous potential</a> for businesses that seize the opportunity. </p>
<h2>The dangers of CEO algorithms</h2>
<p>But when is replacing human CEOs with an algorithm going a step too far? An algorithm, by its very nature, does not have morals, feelings, or anything other than pure logic based on patterns and projections. Would a CEO algorithm sign off on a plan to test on animals if the resulting product would be cheaper, and thus make more sense profit-wise? Even if the algorithm is being watched by human members of the company, damage can occur quickly in this dynamic environment. Conversely, as with the recent hacking attack, the company response needs to be swift in times of crisis: can an algorithm provide the same level of response as a human?</p>
<p>The DAO is certainly not the first to encounter these types of situations. The dangers of algorithms have been well-documented in the media, from <a href="http://fortune.com/2016/03/24/chat-bot-racism/">hackers teaching a Microsoft chat-bot algorithm to be racist</a> to <a href="http://technical.ly/philly/2016/05/12/solon-barocas-hiring-racism-big-data/">algorithms that do not follow equitable hiring practices</a>. Of course algorithms are created by imperfect humans, so the burden of ensuring that things do not go awry ultimately lies with us. </p>
<p>The involvement of humans is necessary in order to ensure algorithms behave appropriately. But human involvement is also <a href="http://www.theguardian.com/commentisfree/2015/dec/06/algorithm-writers-should-have-code-of-conduct">something to be carefully managed</a>. Some, such as <a href="https://www.technologyreview.com/s/543946/when-your-boss-is-an-uber-algorithm/">Uber drivers, are already working under the direction of an algorithm</a>, which they sometimes find makes unreasonable – though logical – demands. Is this necessarily worse than a human boss?</p>
<p><a href="http://www.cnet.com/news/fairy-tales-teach-robots-not-to-murder/">We are now teaching robots morals by having them read fairy stories</a>. If we can program algorithms well, and keep watch over them, then perhaps algorithms may come to make better decisions than a human CEO could. This hinges, however, on our own understanding of what “better” means, and our ability to program our algorithms accordingly.</p>
<p>The evolution of decentralised organisations will force many companies to substantially change, or at the very least reconsider the ways in which their businesses are structured and managed. This will require new expertise, skills and capabilities as the use of algorithms for decision-making increases.</p>
<p>With the proliferation of algorithms impacting everyday business, it’s important to consider that the end user is in most cases, human. </p>
<p>As Simon Hathaway, president and global chief retail officer at advertising agency Cheil Worldwide <a href="http://www.retail-week.com/analysis/opinion/opinion-forget-algorithms-and-remember-retails-about-understanding-people/7004782.fullarticle">says:</a> </p>
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<p>“as we all seek automation in operations, we must not lose sight of the fact that our customers are human.”</p>
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<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Imagine a CEO that could bridge international work days, across country markets, working 24 hours a day.Charmaine Glavas, International Business Lecturer, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/590822016-05-10T20:19:12Z2016-05-10T20:19:12ZThe DAO: a radical experiment that could be the future of decentralised governance<figure><img src="https://images.theconversation.com/files/121828/original/image-20160510-20605-1ptumbi.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The DAO is so democratic that even the logo is up for popular vote. Here's one suggested option.</span> <span class="attribution"><a class="source" href="https://forum.daohub.org/t/create-a-logo-for-the-d/113">The DAO</a></span></figcaption></figure><p>For many people, the birth of the internet happened on August 9, 1995, when <a href="http://archive.fortune.com/magazines/fortune/fortune_archive/2005/07/25/8266639/index.htm">Netscape</a> went stratospherically public. Something similar is happening right now, and it could do for organisations and their governance what the internet did for information and its distribution.</p>
<p><a href="https://daohub.org/">The DAO</a> is a wildly ambitious, risky and radical new entity that has already raised more than US$29 million in a little over a week. When it reaches the end of the funding phase on May 28, it will begin contracting <a href="https://theconversation.com/au/topics/blockchain">blockchain-based</a> start-ups to create innovative technologies. </p>
<p>The extraordinary thing about The DAO is that no single entity owns it, and it has no conventional management structure or board of directors.</p>
<h2>Embracing the ether</h2>
<p>How can an investment fund work without management oversight? In <a href="https://github.com/ethereum/wiki/wiki/White-Paper">2013</a>, a Russian-Canadian genius called <a href="https://about.me/vitalik_buterin">Vitalik Buterin</a>, proposed to do for managers and directors what the industrial and robotics revolutions did for factory workers: replace them with technology. </p>
<p>Buterin is the co-creator of <a href="https://www.ethereum.org/">Ethereum</a>, a platform that, among other things, aims to automate management through code: creating rules that determine what can be done within an organisation through smart contracts. Buterin wonders:</p>
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<p>[…] what if, with the power of modern information technology, we can encode the mission statement into code; that is, create an inviolable contract that generates revenue, pays people to perform some function, and finds hardware for itself to run on, all without any need for top-down human direction?</p>
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<p>These code-made organisations are called “distributed autonomous organisations” (<a href="https://blog.ethereum.org/2014/05/06/daos-dacs-das-and-more-an-incomplete-terminology-guide/">DAO</a>). A DAO is a cryptographic technology that relies on multiparty secure computation – the same technology used by <a href="https://theconversation.com/au/topics/bitcoin">Bitcoin</a> – to ensure no attacker can subvert it. In a surge of spectacular self-conceit, “The DAO” is the name given to the first major DAO to launch on the Ethereum platform.</p>
<p>For another two weeks, anyone can trade Ethereum’s altcoins, <a href="https://www.ethereum.org/ether">Ether</a> (ETH or Ξ, the crypto tokens of Ethereum), for tokens on The DAO (Ð). </p>
<p>Once the creation phase is complete, anyone with a project can pitch to and receive investment from The DAO. Only those who own DAO tokens will be able to vote on which projects are funded by The DAO, and receive rewards if those projects make a return. </p>
<p>It all sounds like science fiction, a spontaneous entity evolving out of something named after a nebulous <a href="https://en.wikipedia.org/wiki/Aether_(classical_element)">gaseous material</a> (thin air?), which claims to be immutable and incorruptible.</p>
<p>The significance of this DAO – The DAO – is that its creators have done the hard work in coming up with a rulebook and its underlying code that others can copy, and thereby use to set up other DAOs. </p>
<p>This standard DAO framework was created by <a href="https://slock.it/index.html">Slock.it</a>, an <a href="https://theconversation.com/au/topics/internet-of-things">Internet of Things</a> company that plans to propose more than one project to The DAO when it is formed. </p>
<p>The rules are designed to ensure no one interest can take over a DAO. For example, token holders can withdraw their stake if they disagree with a decision, while keeping their stake in any project that The DAO took when they were invested, and continuing to earn a return from those that make profits. </p>
<p>The DAO’s <a href="https://download.slock.it/public/DAO/WhitePaper.pdf">white paper</a>, as well as Slock.it’s proposal are attracting significant attention in crypto currency forums.</p>
<h2>Who’s in charge?</h2>
<p>For social scientists like us, The DAO is perhaps one of the purest experiments in microeconomic theory, particularly of contracts, digital organisations and mechanism design. And it is likely to produce significant insights into how innovation occurs. </p>
<p>The thinkers behind Ethereum and The DAO are also investigating radical new governance models that might be implemented using blockchain, including <a href="https://blog.ethereum.org/2014/08/21/introduction-futarchy/">Futarchy</a>, which uses prediction markets to choose between competing policies.</p>
<p>One immediate area to watch will be how the token-holders on The DAO behave. Will all token-holders pay sufficient attention to responsibly vote? Or will it fall victim to crowd mentality? Does having a financial stake mean that voters are more likely to do due diligence, as <a href="https://blog.slock.it/the-inexorable-rise-of-the-dao-2b6e739b2615#.6ig3wvd42">Stephan Tual, COO of Slock.it</a> suggests?</p>
<p>Needless to say, like all activities at the frontiers, The DAO will be highly risky as an investment, and not just because nine in ten start-ups fail. The DAO is only as good as the code it is made from. </p>
<p>As recent <a href="http://www.nytimes.com/2016/01/17/business/dealbook/the-bitcoin-believer-who-gave-up.html">disputes</a> in the bitcoin community have demonstrated, code is susceptible to the human error and frailty of those who made it. </p>
<p>Another dimension that no one is talking about is the lack of diversity of the curator team (a group intended to do due diligence on contracts), when research shows that <a href="http://onlinelibrary.wiley.com/doi/10.1111/1540-6288.00034/abstract;jsessionid=F1CFCD9A21DA5D583B8CA46B9A39DEEB.f02t02">gender and cultural diversity on boards</a> is a good thing. If The DAO fails, it may be because it did not work hard enough to involve a broader group of thinkers in its design.</p>
<p>The DAO reflects a Silicon Valley culture where attracting venture capital for technology start-ups is equated with democracy and seen as the height of innovation. A system in which only those who buy tokens can vote is not an experiment in democracy, but in <a href="https://en.wikipedia.org/wiki/Plutocracy">plutocracy</a>. </p>
<p>Yet the appeal of Ethereum is that it provides a platform for those who don’t want to build a private blockchain to create, organise and govern. This opens blockchain technology up to a world far beyond helping big financial corporations and markets <a href="http://www.smh.com.au/business/banking-and-finance/budget-2016-data61s-blockchain-review-welcomed-by-fintech-leaders-20160504-goluh1.html">achieve efficiency gains</a>.</p>
<p>It is possible that the innovations that prove the most transformative will actually be those parts of our social fabric that are currently not reaching their full potential because no effective distributed coordination mechanism exists. An interesting example is scholarly publishing. </p>
<p>In a <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2763975">recent paper</a> with some other co-authors, we have suggested a new way to move scholarly publishing on to the blockchain by reinventing a journal as a DAO.</p>
<p>To paraphrase US congressman <a href="http://www.barrypopik.com/index.php/new_york_city/entry/government_is_simply_the_name_we_give">Barney Frank</a>, governance is the name for the things we do together. If DAOs can remove some of the messier aspects of governance, we might be able to do a whole lot more.</p><img src="https://counter.theconversation.com/content/59082/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ellie Rennie owns DAO tokens and ETH. She receives funding from the Australian Research Council. </span></em></p><p class="fine-print"><em><span>Jason Potts receives funding from the Australian Research Council. He is also an Adjunct Fellow at The Institute of Public Affairs.</span></em></p>Distributed autonomous organisations, or DAO, are a new form of decentralised organisation using blockchain technology. The DAO is first off the block, and it’s already making waves.Ellie Rennie, Deputy Director, Swinburne Institute for Social Research, Swinburne University of TechnologyJason Potts, Professor of Economics, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.