Innovations such as digital currencies distributed Ledger's blockchain IOT systems that will transform many industries from finance and insurance to energy and cybersecurity but probably the extraordinary thing about this next generation of the Internet built on the blockchain is that it is as one commentator noted an institutional technology at the heart of social organizations and all forms of institutions is a question of how we work together by exchanging value within a trusted environment the blockchain is the technology that enables automated trust and the automated frictionless value exchange this capacity to automate the basic workings of social institutions coupled with increased interconnectivity means that we increasingly have the technological means to create massive organizations that are truly distributed and automated something we have never seen before.
Whose potential is only really limited by one's imagination this potential of the blockchain to revolutionize human social institutions is most clearly demonstrated in what are called distributed autonomous organizations that give us a glimpse into the future although truly autonomous decentralized organizations are something new they can also be seen as just one more step in a millennia-old process of institutional evolution a process in which we have gone from organizations based fully upon the specific characteristics of their leaders within hierarchical structures to the modern bureaucratic organization to today's platform economy where we have moved into semi-distributed organizations where businesses operate platforms where the rules are executed by computer code automatically in our current platform economy that has been built on web 2.0 technologies over the past decade organizations are a hybrid a distributed automated platform and centralized business organization.
Automated management of a distributed organization on a more technical level a Dao is an organization that is managed through rules and coded in smart contracts and run on the blockchain does our online platform communities with their resources organized according to rules agreed in advance and set out in its code Dow's are an open-source software capable of modifications remember consensus they are currently made possible by the development of aetherium,aetherium is a public blockchain which works as a decentralized virtual machine for executing peer-to-peer contracts.
Dow's are essentially a set of complex smart contracts that combine to form a set of rules that manage the operations of a group of members and their resources distributed organizations are based on a few core principles to their design which are ultimately trying to support a self-sustaining system of the organization through local feedback loops instead of having formal management structures monitoring and coordinating the organization from a central point decentralized organizations work through signaling systems which are distributed feedback loops as means for aligning the individual with the group distributed organizations tackle a problem by creating an infrastructure of cooperation done through the local interactions between members and, signaling systems which are designed to create a self-organizing system a good example of one such signaling system would be the feedback a buyer leaves for a seller on eBay thus creating a signal to others about the sellers trustworthiness via only peer-to-peer interaction at the heart of these distributed organizations is the idea that groups are about value as measured by some form of a token with distributed, Ledger's we can create markets out of tokens that represent whatever value system the organization is based around it is this value token system and the market mechanism.
The whole organization distributed autonomous organizations are very much in their infancy they are still just experimental not only do we lack the finished software solutions we in many ways still lack some of the basic science required to understand the full dynamics through which self-organizing social systems can work in a stable safe and sustainable fashion many things can go wrong with badly designed social systems one of the first large-scale autonomous distributed organizations was recently hacked at the cost of millions of dollars we are still in the experimental phase of trying to understand exactly all the parameters and dynamics that are needed to make a social system self-regulating and then building these into the software this being said several distributed systems for organizational management.