you probably know how a vending machine works it acts as the middleman for your food cravings you pay the machine and it gives you whatever snack you bought this advanced technological box the vending machine still needs humans to run it though there needs to be humans who pay the electric bill there needs to be a human who checks it when it's low then when it is low there needs to be someone who orders more of the product then after the product arrives someone still has to restock the machine and even more so someone has to
collect the money and maybe replace some quarters so even though this is a technological box designed to help people without needing a human it still requires humans welcome to whiteboard crypto the number one youtube channel for crypto education and here we explain the topics of the cryptocurrency world using analogies stories and examples so that people like you can easily understand them in this video we are going to explain what a tao is how they work and we're going to include a few examples of where they might be useful let's dig in first off what is
a dao dao is an acronym that stands for decentralized autonomous organization this means it is roughly an organization run by code agreed upon by the people who started the dao smart contracts which if you don't know what a smart contract is you should definitely watch our video on it but smart contracts can do just about anything if you're smart enough to program them to do so this means instead of asking for a raise from your boss we're trying to decide who to hire from a list of applicants a smart contract will simply do these tasks
making the whole organization self-sustainable or autonomous now we've found that this channel seems to teach best by examples so let me expand upon the vending machine example that we used during the intro if a vending machine was a dow then every part of the process where a human was needed would simply be replaced with code or at least code version of humans robots basically we would make sure that the vending machine could automatically check its own stock and when it was low we would make sure that it could send its server the information of what
products needed restock then when the stock arrived a robot would restock the machine with a new product and at this point in time also take the cash out to deposit to a bank somewhere in reality this doesn't seem possible but it is essentially how a dao works speaking of that do you know how big companies like apple or netflix or walmart they all have board meetings and at these board meetings shareholders of the companies will meet together and they get to vote and make decisions for the company and then the ceos of this company get
to make sure that the decisions are actually followed through using the chain of command in that company in a dow there are no ceos instead once a decision is made the code of a platform is changed so that the entire company so to say is changed immediately now the purpose of this is so that computers and code will perform much of the decisions and simple routine operations that a company like apple or netflix or walmart requires to function now you may be wondering code can't improve itself and you'd be wrong but at least you'd be
on the right track of where this video is going dows can continually improve and grow just like people because their shareholders can submit and then even vote on changes to them usually in the world of crypto a dow may launch with a few million tokens every token is a vote and whoever holds the most tokens can have the largest votes this gives the tokens a price and it also gives them a use it also allows the dao to improve make changes and evolve as the world evolves now this includes actually hiring voting on a salary
and then technically even employing certain developers within the autonomous organization it would then just pay them with cryptocurrency in the case of a vending machine we can say if that vending machine made any profits it would redistribute all of those profits to the shareholders through its native dao token now there are many ways this could happen but any token holder would supposedly get an increase in value if the vending machine dial made a profit so this potential profit along with voting rights makes holding a dow token much more valuable than any other useless token you
might see on the subreddit crypto moonshots next i want to go over some of the benefits of a dao benefit number one is that it's trustless and this is probably the biggest benefit of a dao in fact you do not need to trust any ceo or manager or leader with your decision making skills the program or the whole organization will continue no matter if a major developer stops working on the project or even if the funding goes away another benefit is that they cannot be shut down in the case of major corporations the cia or
the fbi or any major government service can technically step in and be like we're shutting you down or even give us all the information you have on this guy and if you're in the united states you'd be forced to comply in a dao the only way they could make this happen is if they had a very large amount of tokens and then submitted a proposal to be voted on and then went through the voting process fairly in other words a government cannot skip the line and the last benefit of a dow is that it is
open source daos are also open source which means that their code is out there for anyone to look at and even improve upon open source projects are usually much more reliable simply because other programmers can help the main developers find some bugs in their code and then even propose ways to fix them now even though there's a ton of benefits to a dao i'm gonna go over two downsides of them the first downside is that they are vulnerable to attacks since anyone can look at the code it also means attackers can look at it if
these attackers know intimately how the code works they can then reverse engineer the attacks and even test the code before deploying it to make sure that their code works if it does the dow could be attacked the second downside that we have found is that there's no business secrets so research and development is usually corporate information that corporations have spent a lot of money and time on without any significant return now they do this in hopes that one day it'll pay off and the payoff will be big because no other company has their advantage in
a dow though business secrets are difficult to keep secret since the code is all open source and really anyone can look at how the dao is set up so far we've been over a lot of the theoretical stuff of how a dao should work are there any real life examples yes here are a few maker dao aragon metacartel gitcoin dash and the famous the dao so now we're gonna go over the story of the dao which we think is something that you should know probably the most important and most famous dao is one called the
dao the dao is a venture capitalist fund created in 2016 that was well known for its failure in fact around 20 000 investors pooled around 150 million dollars into this project in short the account of the dow was actually hacked and 50 million dollars worth of ethereum was lost due to the attackers now this is actually why we have ethereum an ethereum classic ethereum classic is actually the original blockchain that still has the money hacked however developers took the blockchain realized that it wasn't right for someone to steal 50 million dollars and then also realized
they could make a new blockchain where the money was given back and this is how we have ethereum today in fact the main developers of ethereum did what is called a hard fork and if you're interested in what a hard fork even is or how it differs from a soft fork leave a comment below we love when we check our video comments and see a bunch of people saying yes please make a video on it comments like those get us even more excited to create it so in short for organizations right now we use people
however in the future maybe we will use smart contracts and code as we in this video we have a strange favor to ask we're trying to grow our facebook page just as a way to reach some new people it's a new experiment we're launching the videos we share on there are usually very similar to those on this youtube channel and basically we want to ask you to check it out especially since facebook will probably be a dow one day and we want to help spread education around how this stuff works besides that we'd love you
to see us between your cousin getting married and one of your high school friends posting if anyone is hiring jokes aside thank you guys so much for watching this video we hope that you've enjoyed it we also really hope that you learned something and even more so we hope that you check out our other videos
