DAOs: Companies Run by Communities

Groups operating in cryptocurrency are exploring the communal potential of DAOs, “decentralized autonomous organizations.” Chris Dixon examines why DAOs were created and how they are experiments in democracy.

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Topics include: Defining DAOs • Community First • Experiments in Democracy


[SOUND EFFECTS PLAYING] [MUSIC PLAYING] - I'm a big fan of reading history and specifically the history of technology and markets and just how these things developed. I think a particularly interesting historical period is the industrial, kind of the Victorian industrial era. And in 19th century, the growth of railroads and stock markets came out of that and electricity and eventually cars and airplanes and all these other really important things that are ubiquitous today. Much of that was developed in the 19th century. I think one thing that's often overlooked is there were also very important legal and corporate inventions. And specifically, a very important invention in the 19th century that I think really enabled the growth of a lot of these new industrial technologies was what's called the "LLC," the limited liability corporation. And so if you were building a bridge or something and somebody got hurt or you lost money or something else, you had unlimited liability. And what that meant was, if you were an investor and you'd given them some money and you weren't even at the bridge and you had no involvement but somebody got hurt or something else, you were liable. Unlimited liability, meaning you could lose your house, you could lose your life savings. And so as a result, you just wouldn't give money and invest in somebody that you didn't know really, really well, right? So it was a very hot topic for decades. I think very analogous, as an aside, to the way that Web3 and crypto is controversial now because it's a new concept and it's a new way to think about ownership and legal concepts and things like this. Eventually, the dam broke and new legal infrastructure and regulations were created to mainstream the limited liability corp. Today, almost every company you interact with is a limited liability corp, everything publicly traded, everything else. So you suddenly had stock markets. So you could say, you know what? I'm not only going to raise money for my railroad from people in this town and people I know. I'm going to go to this central venue, this Stock Exchange, and I'm going to say anyone can buy it as long as you have money. And there's going to be a standardized system for naming these things, the ticker names. And there's going to be a standardized system for buying these things, the shares. And there'll be this sort of fungible system where the shares can be interchanged for each other. And if you look at the internet today and the things I've talked-- these companies like Facebook and Google, these are basically-- I look at these as companies governed by structures that were very effective in an industrial era, which is all about aggregating capital upfront, building these big works, like public and private works projects, and then figuring out ways to extract money back then from the people that use the networks. There's a very effective system for the industrial era. I think it hasn't wo...

About the Instructor

Since Bitcoin’s launch in 2009, crypto has offered the hope of a stronger, more democratic financial system. And it’s raised plenty of questions as it continues to evolve. Now experts and skeptics at the center of the conversation are sharing a straightforward look at how this ecosystem is changing. Learn the basics, dive deep into the world of blockchain and Web3, and get the breakdown on what you need to know now.

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Chris Dixon, Changpeng “CZ” Zhao, Emilie Choi, and Paul Krugman

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