What Is A Decentralized Autonomous Organization (DAO); How Does It Work?

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Imagine yourself being in a gang. Only this particular gang handed you the keys to the mansion and the Lamborghini and sent you to college. Okay, now get your head out of that fantasy because we’re talking about a DAO today. So I don’t need you sleeping on this one.


That would be a nice dream, though, which might also be a good way of looking at a DAO. To be technical, we’re talking about a Decentralized Autonomous Organization. They exist, and they can be pretty powerful.

A group of people who don’t actually know each other put their money together, and that money works toward a specific purpose. One tangible example of this is the ConstitutionDAO, which comprises 17,000 different individuals who wanted to buy an early copy of the U.S. Constitution. Unfortunately, they were unsuccessful. (But only because billionaire Kenneth Griffin outbid them).


But think about the strength of that organization. They were able to pull together $40 million. That kind of money can move mountains, and they almost did. It took a billionaire to beat them, and there aren’t that many of those in the world.

What Does That Mean?

If you’ve learned anything, you’ve learned that there is a group of people out there that you can join right now. They work together to own things like NFTs, stocks, or the Constitution of the United States. Because they have the impression that it takes money to make money, they pull together as much as possible and communicate what they want to do with it.

Now, let’s look at you, for example. You can own a portion of Bitcoin right now. If you have about $45,000, you can own one Bitcoin yourself. But if you and your friends get together and put all your money on the table, how much would it come to? Then, think about what you could do with it.


That’s a DAO. The only difference is that a DAO doesn’t have to be a group of friends. In fact, the words “decentralized” and “autonomous” are right in the name. So one guy could be in France while another guy could be in Germany while you might be in Oregon! That’s the beauty of it. Now, imagine about 17,000 more people passionate about your exact cause or goal, worldwide.

How Is A DAO Safe?

“A DAO’s financial transactions and rules are recorded on a blockchain. This eliminates the need to involve a third party in a financial transaction, simplifying those transactions through smart contracts. The firmness of a DAO is a smart contract. The smart contract represents the rules of the organization and holds the Organization’s storage. No one can edit the rules without people noticing, because DAOs are transparent and public.” NEO Law Group

If it scares you, just buy Bitcoin yourself and be happy. But a DAO can be very powerful when working toward a common goal. Imagine yourself walking into that mansion and driving that Lamborghini with your Bachelor’s Degree. If that were the goal of the DAO, you’d be set.

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