In this blog, I am going to introduce a revolutionary technology that utilizes blockchain, the DAO. While I believe that the DAO has great potential and could be a break-through for the development of Internet of Things, I hold doubts about its performance and security in its early stage of development.
To start with, the DAO uses a blockchain based currency called Ethereum, which was launch in 2015. Its currency is called Ether, and it is widely considered “Bitcoin 2.0”, and has outperformed most of its competitors and jumped to the second place in terms of market value in just one year. What makes Ethereum so popular and attractive is that it allows building smart contracts. Smart contracts are general-purpose codes that execute on every computer in the network, and could be programmed rules or orders. Therefore, smart contracts are identified by developers as a means to build autonomous organizations.
A German company, Slock.it introduced the DAO in 2015 as a prototype for its ultimate decentralized Internet of Things project. For example, people can share rides without being governed by Uber. The DAO relies on codified business rules to govern the organization, which are contributed by developers in the network. In the DAO, users could purchase tokens as voting rights, and a decision is made on any project upon a 50% pass rate. The DAO was so popular that it raised $150 millions in the first month and generated over 50 projects for users to vote.
However, is the DAO as promising in its security as in its ideas? We’ll find it out in the next blog.
Source: http://www.coindesk.com/understanding-dao-hack-journalists/