There is change brewing in technological societies across the globe. The decentralized nature of blockchain and the new innovation taking place with distributed ledgers is slowly creating a paradigm shift in the way we solve problems. But I'm getting ahead of myself... Why does any of it matter?

Well this has been a real focus of discussion recently in the ADSactly Society (of which I'm a proud supporter) and more specifically the effect it is having on our fundamental understanding of value. We have had many conversations revolving around the idea that value doesn't have to be centralized and that direct exchange of value is much more beneficial to both parties than having exchanges go through a middleman and then result in less for the two people actually exchanging value in the first place.

This is a great place to work from in terms of a case study so I have decided to use Facebook as an example of centralization and the way it handles the dispersement of value.

Technologies such as Blockchain and the distributed ledger are enabling further decentralization and distribution of organizations. Both the workforce and consumers are now keen to move away from the centralized and hierarchical structures towards transparent and inclusive approaches, which give people more choice and control on how to get things done.

The main idea in the paragraph above is that blockchain and distributed ledger technologies have the potential to offer people more choice and control in how they do things on a day to day basis. I'm not sure but to me that sounds like more freedom. Freedom is good so we should definitely push for that as a community!

Now, when we put the spotlight on large corporations and ask the question, how are corporations enabling choice and control in consumers. The answer is, they are not, that is the exact opposite goal for most large multinational corporations. They need us dependent upon them. That's how they grow and expand, if we don't need them and use them, they cease to exist.

There have been many recent concerns when it comes to centralized organizations like Facebook, Apple and Google (now Alphabet, Inc.), that along with Amazon and Netflix form what are referred to as FANGs.

An acronym for these high-performing technology stocks, the FANGs have accounted for some spectacular investor returns over the past year (notwithstanding the weakness lately in Facebook’s stock price), as well as representing a hefty percentage of the overall market capitalization of the U.S stock market.

So if these 'FANGs' are getting the lion share of market capitalization and all the money is moving behind their cause we need to ask, is that good? Are people getting their money's worth from these organizations, are they helping us to have better lives. Yes I know I'm being naive because when did the persuit of money ever get formally attached to helping people have better lives? Well, it should in my opinion but there are a lot of people who would disagree with me certainly!

^{Image Source: Forbes}

The stock price of each FANG company increased by more than 30% last year, which provided a shot in the arm the S&P 500 and helped it record a near 20% gain. That said, the Price-to-Earnings (P/E) ratios of the FANG stocks were looking a wee bit frothy as of late this March.

While Amazon.com traded at a P/E of 327, Netflix was on a P/E of 210 at late last month. And, Facebook and Google-parent Alphabet, who have been linked with privacy concerns, were trading at valuations near 52-week lows.

Well there is certainly a case to be made when it comes to large multinational companies getting incredible amounts of investment and therefore being granted huge powers over transforming society!

But if people are paying attention, just the fact that I'm discussing this topic means that there is public scrutiny into what is going on with this here... In fact these mega tech behemoths have created distrust in users when they examine the power they have been able to amass and what they use it for!

Well they have a good reason to be concerned especially with situations like the Cambridge Analytica debacle where the world learned organizations have been able to extract private information from the accounts of around 50 million Facebook users!

So what are people so concerned about then? Well it is a bit scary when you think about corporations and governments vacuming up personal information conducting mass data collection. Where do they get all that data from anyways? Well they get it from the FANGs! We give them the information knowingly but in most cases unknowingly... Remember that little terms of service agreement you clicked a box on? The one that had the really small print that would have taken you hours and legal help to understand? What did you do? You just clicked the box and moved forward right? Yah well that is how they get us...

As a result of recent scandals there are tons of privacy and data ownership advocacies emerging... Many are now speaking out and the message is loud and clear, many believe that centralized and hierarchical corporate structures are not agile enough for today’s business environment. Can organizations adapt? If they can't they will fade away and be replaced by a new paradigm... Change doesn't wait for anyone.

Blockchain and decentralized services now challenge these centralized authorities. And, their endeavors are finding support from an increasingly discerning market. On the more progressive end, decentralized autonomous organizations, or DAOs for short, have also figured in the discussion of organizational structures. For example, initiatives in the shape of Dash, Digix, Slock.it, and The DAO have been met with varying degrees of success. Upcoming efforts like DAOstack, which is described as a “decentralized framework for decentralized organizations” and based in Israel, is seeking to seek to lower the barriers to founding DAOs.

I do believe that DAO is going to be the way forward for organizations and those that adapt more quickly will have a headstart! Guess what, if you are reading this and a member of the ADSactly server, you are part of a DAO already!

So lets look at some data to back this up shall we? Well, a recent study was conducted in which 9 in 10 (87%) of technology professionals answered that they believed blockchain technology will be as transformative for business as the Internet has been!

Beyond that there were a few other things to be learned from the study I've referred to:

1.) Privacy of data is the highest priority amongst people in IT currently;

2.) Two-thirds of respondents responding have trialled or are using blockchain technology

3.) Nearly half of respondents who have not worked with blockchain tech yet will do so in next two years.

If these findings are accurate then we are about so see some huge changes in coming months and years! Privacy is of great concern, people have used blockchain technology and people who haven't will use it in the next two years! Are you kidding me?! You are reading this article on the first blockchain based social media network! You are ahead of the pack my friend!

^{Image Source: Pexels}

But wait, what is wrong with centralization? Why aren't the systems we have now good enough to build from?

Well, its unfortunate but probably human nature that plays the biggest role. It is hard to argue that corruption and greed don't play a role in influencing human decision makers... The fact is corruption and greed play a huge role and that right there is pretty close to the root of the problem. What is so interesting is the fact that blockchain and decentralized approaches represent mechanisms which can lessen potential abuses of centralized systems.

What is a DAO? A DAO is a decentralized autonomous organization. What does that mean? Well essentially, DAOs are run according to the rules established through blockchain smart contracts. They are transparent and the rules are set in stone so you can know what you are getting into before you make a decision to work with them.

DAOs use the decentralized and transparent nature of blockchain to function and those properties put them lightyears ahead of centralized organizations in my opinion. But that doesn't mean that they can't be changed, this was thought about and a solution was presented that keeps them fluid in nature as well. If someone wants to make changes to the governing rules, they can be achieved through consensus of peers. This is a superior model as well in my opinion to the alternative being decisions made by an individual or a small group which again may easily be influenced by corruption or greed.

Unfortunately is a very bumpy road indeed when trying to change the world for the better using a new technology that has yet to be fully tested and refined. There have already been a few mishaps in attempts to establish DAOs. However there are quite a few success stories as well. Projects like Dash have risen very high in the rankings of top cryptocurrencies securing a top 15 place and a market capitalization of around $2.5 billion. This is an example of a very successful DAO!

Slock.it, which has successfully offered smart locks tied to the blockchain, is actually the precursor to The DAO. After a successful crowdfund, its team set its sights on spinning off a decentralized venture capital fund that became The DAO. Unfortunately, The DAO met quite an unfavorable end. An error in The DAO’s smart contract code enabled a hacker to siphon peer contributions amounting to $50 million in Ether tokens. It is even doubly unlucky that The DAO used such a name. It is now hard to dissociate the ill-fated organization’s name from the innocent acronym.

There is a saying that the first one out of the gate is bound to get a little bloody and this situation with the original DAO getting hacked was almost bound to happen. People learn, they adapt and if something is worthwile they will continue to perfect it!

^{Image Source: Pexels}

So what does the future hold in terms of decentralizing major organizations? Will Facebook go the way of the dinosaurs? It just may but large bohemoths like that don't go down easily so adaption will most likely be the route they attempt to take as well...

DAOs definitely have potential to evolve organizational structures, in fact, the technology has already proven its ability to enhance global cooperation and collaboration through digital platforms.

“DAOs are a new form of association, based on crypto-economic incentive at the individual level that generate large scale cooperation at the collective behavior - akin to blockchain itself but around any general goal/action,” argued Field, a PhD holder in theoretical and mathematical physics from the Weizmann Institute of Science, which is located in Rehovot, just south of Tel Aviv.

What DAOs need though are lower barriers to formation and the emergence of frameworks such as turnkey solutions is essential to this. The wider availability of frameworks, resources and mechanisms would help DAOs avoid the too pitfalls encountered by previous attempts and help them focus more on solving key problems across industries.

Beyond that we may even see additional technologies combining in DAOs, technologies like Artificial Intelligence (AI) and the Internet of Things (IoT) which would really present a potential for unprecedented automation when applied to DAOs.

So now it is time to get your opinion. How do you feel about decentralization? Do you think a DAO is a superior model when compared to a centralized corporation? Do you think Facebook will survive as a centralized entity or will it be forced to move over to a DAO type model eventually and the rest of the multinational corporations that exist for that matter?

Thanks for reading.

Authored by: @techblogger

In-text citations sources:

"After Facebook's Data 'Blow-Up' Are DAOs Leveraging Blockchain's Future?" - Forbes

Image Sources:

Forbes, Pexels