The crowdfunding to the investment company “The DAO”, which has exceeded one hundred million US dollars and counting, has the old world in confusion. “How can something leaderless run a company, or be trusted with an investment?”, we hear. This shows the real depth of the digital divide.
The DAO – short for Distributed Autonomous Organization – is actually a rather bad name for this venture. That name is a modern equivalent of “The Corporation”. Something like “The Distributed Autonomous Venture Investor” would probably have been more understandable for this particular organization, as there are many more DAOs (just as there is more than one corporation). But still.
TheDAO is the largest investment crowdfunding ever, beating the game Star Citizen which has pulled in $100 million in funding. TheDAO has currently attracted 108 million dollars in investment money, mostly from small and individual investors. This has left all the large investment institutions in complete confusion and disarray, as the technical term for this kind of amount is “a shitload of money”, which in turn attracts the attention of Wall Street.
Star Citizen is understandable to Wall Street. It is a high-end entertainment product with an experienced game designer, with some of the most successful products ever, at the helm. The CEO has recruited some of the best people in the industry. This is grokable for the old world.
And then there’s TheDAO. No leader, no incorporation, no nothing. Just a shitload of money (technical term) coming from everywhere.
“Who’s making the decisions?”
“Where’s the business plan?”
“What’s the investment idea?”
What the old world fails to see is that there is leadership, there is a business plan, and there’s a clear investment idea. It’s right in front of them. They just fail to recognize it as such:
The source code.
The source code makes the decisions for all to see. The business plan is right in the source code.
The fact that Wall Street doesn’t recognize source code for perfectly valid, validatable, and transparent business logic is why Wall Street is being left behind.
It was the exact same thing with Bitcoin a couple of years ago. “How can you trust a currency that doesn’t have a central bank that can decide to destroy your holdings?”
The answer, of course, was that you could trust it exactly because it didn’t have that kind of central bank – because the source code was open for all to see, and therefore transparent and predictable.
And that’s why you can trust the new kind of organization. Unregulated, unstoppable, uncensorable free enterprise, with the source code open for all to see.
Because the old world can’t stop it.
(Update: Star Citizen is still the #1 crowdfunding with $113 million as of Monday lunch European time. TheDAO, currently at $108 million, is expected to surpass this by Tuesday lunch or so.)
(Update 2: Well, that was quick. TheDAO is at $117 million as of 19:00 European time Monday, officially making it #1.)