Ethereum Q&A: Scaling decentralized organization

Decentralized autonomous societies. Kevin asks, “You have spoken previously about the concept
of a decentralized autonomous organization (DAO).” “It is exciting how the model forces us to re-think
the reasons for building hierarchical organizations.” “Now that we have the ability to draw consensus from a
group of peers, without a need for trusted third parties, it can truly change the way we think about,
and structure, organizations of all kinds.” “What is your long-term vision for
this concept at a societal scale?” “How do you foresee our societal governance models
becoming more decentralized and autonomous?” “I am aware that we are very, very far from this world.
I won’t be mad if [your prediction] ends up being wrong.” Thank you so much, Kevin. Decentralized autonomous organizations, people
organizing in loose short-, medium-, or long-term… associations where the rules are clearly defined
through the neutral execution of smart contracts. Certainly these types of organizations will be extremely
interesting. In most cases, I think this will be applied… in the narrow [area] of corporate governance,
meaning for-profit and short-term endeavors. Adhoc projects, loose coalitions, crowdfunding
[efforts], and other types of loose associations… of investors or small start-ups. They can benefit from this kind of decentralized
autonomous organizational [structure]. I think the term “decentralized autonomous organization”
describes the end vision [of what this will become]. The word “autonomous” really means that
it is not being controlled by individuals, but instead has a set of rules
that allow it to operate on its own, not [entirely] directed by a board
of directors or a shareholder vote. It is a loaded set of words because we don’t know
how [such a structure] would play out [in practice]. Of course, it includes a whole spectrum
of possible organizational models. You can have [structures] that are closely held, tightly
controlled, but still operate through a set of rules… where you are re-implementing the voting
mechanism of a traditional corporation, and the smart contract will do what an electronic
share would do in a shareholder voting system. [On the other end of the scale, there are]
very autonomous rule-based systems, where no one is really in control, where people can
participate in the organization but can’t change rules. How would we scale that to the level of a society?
That is very difficult to see from this perspective, from what we are doing now, because
these technologies are still very immature. We will need to see them [tested] in small-scale
corporate environments and associations first. Then you might start seeing them be generally
used for governance and decision-making. For non-profit associations, clubs, and things like that. We could see these new models of organization
emerge related to political causes or charities. Eventually, these [tools] may migrate to types
of governance that involve societal functions… within a particular geography,
[such as] a municipality or town. But it is much harder when you are talking about
geographies, because there are better mechanisms… for organizing people in a close geography. At the same time, the problems we have with
governance at scale in large geographies… like super-national federations such as
the United States and the European Union, or even transnational organizations such
as the United Nations, are problems of… trying to do decision-making at scale, while being
removed from the people who are affected by that. The real challenge is, how would you
[incorporate] representative governance? Do we need representatives to vote on our behalf [in
such a system], or can we have a more direct model? The difference between democracy and [pure
democracy], where representatives are voting for you… or you vote directly in all matters that influence you,
where you might be voting twenty times per day. Again, these are all interesting models to explore, but we are very far away from [implementing
any of] them [with smart contracts]. That doesn’t mean the vision isn’t valuable;
we just have no idea how this will play out. As more capabilities become available,
as more people learn about this technology… they will find different ways to explore it,
and come up with ideas we can’t imagine today. [AUDIENCE] You talked about the parasites.
.. I am starting to see these parasites. But if you call these folks “parasites”.. I don’t think
a lot of people want them to come in [to the space]. Do you think these parasites are serving any market?
How do we deal with that? Or is that mean? [ANDREAS] That is part of life. Because we built
something good, the sharks are now circling. They are smelling some chum. The reason
this industry has become saturated with sharks, is because there really is something of value. There are also a lot of scams, bullshit,
and other things floating around that. But it is also a recognition that we have built
something interesting, valuable, and different. They are desperately trying to buy it, own it,
get a piece of it, but here is the beauty of that: there is a poison pill at the center of cryptocurrencies,
which is that its essence is decentralization. If your organization is trying to take [“the underlying
technology”] for your new parasitic source of revenue, the only way to do that is by
decentralizing your own power. You can’t do it. You are architecturally and
organizationally allergic to decentralizing power. Your entire presence and form of existence is
based on centralizing as much power as possible. You can’t swallow this pill. It means giving up control. It is [even] harder than re-inventing a
corporation on an open-source basis. Very few people can actually do it. They [usually] do it after shedding a lot of profit, re-
inventing themselves when they have no other choice. And yet, while you are reluctant to swallow this pill,
your younger and more nimble competitors, who you kept out of the industry for decades
through regulation, regulatory capture, and lawsuits, they can swallow the pill more easily
and decentralize themselves first. They will attack you from left-field.
The big banks will be really slow to move. [Many of] the third-tier banks will say,
“Give me some of that decentralization.” “Let’s shove it so far up the ass of JPMorgan Chase that
they won’t even know what just happened.” [Laughter]

19 thoughts on “Ethereum Q&A: Scaling decentralized organization”

  1. I agree company type structures will be the first to use it. and I think it will give them significant advantage over groups that do not. which will lead to larger company type groups forming and gaining power, while the ones that are slow to move (ie govt) will lose out. the whole geographic-based people-farming paradigm is going to have to change i think.

  2. J P Moron & co will lose more catch up time, whilst trying to get rid of the grin, due to mentioned anal excitement….. Keep up the stupendous work & thanks for it

  3. good day. How can I contact you for cooperation? I sometimes want to take your videos for translation and publication on my channel.

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