The foundation stone of our Modern society are “The Companies” which have been regarded as the history’s great catalyst for good and evil. This revolutionary concept of human civilization keeps on influencing the way we live, connect, and exchange information and value. From the conception of this idea to this date the number of behemoth companies is increasing thereby increasing the localization of power that affects the society in general, seen more in negative light rather than positive one.
Manifestation of problems with company structure
'Too big to fail'- that's what we all believed until 2008 when the behemoths like Lehman corporation came crashing down, triggering the domino's effect. One company after another declaring their bankruptcy resulted in jamming the economic wheel of development. This sudden awakening of fragility of our economic system was result of years of doing business with the flawed strategies and human greed pushed to its limits in pursuance of risky profits. The rules were bent to showcase the healthy bottom line when in essence it was a propped up on the irresponsible risk taking by managers to pursue the outlandish paychecks and monetary bonuses.
Birth of Cryptocurrencies in the middle of Chaos of Financial Crisis
All the risk taking and greed had the single point of failure because of these organization's centralized organizational structures. While the world was under the chaos, a new seed of disruption was sown by an unknown man or a lady or a group of persons called Satoshi Nakamoto. This disruption had met with positive as well as negative criticism just like any 'change' that ever occurred in the evolution of our human civilization. This disruptive force is known ‘Bitcoin’- The great granddaddy of cryptocurrencies.
The unleashing of 'Bitcoin' protocol had opened up a plethora of opportunities to re-imagine the way the creation and transfer of value takes place in our society. The basic ideology was simple i.e. to take back the power from centralized institutions and give it back to the people. The technology underlying the 'Bitcoin' which enabled this decentralization and distribution of power back in the hands of people is called 'BlockChain Technology'. Blockchain in simple words is a distributed public ledger which holds the record of every transaction that ever occurred since the existence of 'Bitcoin'. As it’s a distributed public ledger which means that everyone in the network has the record of all the transactions, any fudging with the transaction data in ledger is impossible because of its decentralized characteristic.
First Decentralized Autonomous Organization (DAO)
The ‘Bitcoin’ was the Blockchain 1.0 which provided a simple solution to transfer of value but had its own flaws that are being improvised and innovated by others in the evolution of blockchain technology. The Blockchain 2.0 which was heralded by the ‘Ethereum’. The ‘Ethereum’ had codified the idea of contract between two parties into ‘Smart Contract’. Smart contract was basically the electronic contract which was codified with certain rules/conditions to which both parties agreed without any requirements of legal intermediary. And also, proposed the Decentralized Autonomous Organization (DAO).
The concept of DAO paved the way for reimagining the organizational structure and innovation in governance and management of such organizations. A DAO is an organization where organizational decisions are made electronically with smart contracts or through voting among its members. The world’s first DAO was called the “The DAO” that was meant to operate like a venture capital fund for the cryptocurrency space. It enabled anyone to pitch their project idea to the community and receive funding from the ‘DAO’. Anyone who owned the DAO tokens could vote on projects and receive rewards if the projects turned a profit. The lack of a centralized authority reduced costs, made the process more democratic and transparent while giving more control to the investors. Every process in the DAO was automated and run on smart contracts.
But this first DAO based on Ethereum had its share of failures because of loopholes in its smart contracts that were exploited by the hackers and funds of ‘The DAO’ were siphoned off. Though the funds of the investors were ensured by the hard fork of the Ethereum blockchain, but the concept of the DAO was forgotten by the innovators across the cryptocurrency space until 2017 when it started gaining the limelight again.
xDAC: DAO to Mainstream Decentralized Autonomous Company (DAC)
xDAC is a project that can be termed as a subset of DAO and subsequent innovative evolution to the DAO invented
by the Ethereum. It would also be based on a new blockchain protocol, called EOS which is also termed as “Ethereum Killer” with its advanced features and smart contract technology. So in essence, xDAC would be a decentralized network with a built-in Proof of Work (PoW) incentive mechanism, a comprehensive governance tool and an innovative support system for DApps and internal Autonomous Agents. This vision of new structure of companies has the potential to totally disrupt the existing organizational structures of companies existing at the moment.
This new generation of companies will also provide much more autonomy and transparency than the existing traditional companies as well as a better governance, finance and team managing system. xDAC is meant to omit the traditional middlemen and providing trust and transparency by using blockchain.
One of the questions that brings doubt among people when they try to digest the idea of decentralized autonomous companies is that how an xDAC would comply with the rules and regulations or laws of a particular jurisdiction. The solution to this problem lies in the fact that it’s not a rigid platform but the proposed rules can be changed as per the voting of token holders and codification of the particular laws and regulations on the xDAC platform for smooth functioning of business.
The xDAC platform would enable the new generation of entrepreneurs to expand throughout the world. The companies built on DAO platform such as xDAC platform can be seen as agile and adapting to the diverse cultures and territories around the world. Much more like the ‘David’ of the 21st century companies ready to challenge the monopoly of power and one way street of value creation by the aging ‘Goliath’ of the various Industries. But only time would tell if ‘David’ wins the battle against the ‘Goliath’ and xDAC establishes itself as a prominent one in this space.