Distributed Autonomous Corporations
1. Stan Larimer:
"Distributed Autonomous Corporations (DACs) are a generalization of the concept of a crypto-currency where the currency is backed by the services its miners perform rather than a real-world commodity like gold, oil, or, ahem, thin air. If we can barter for goods and services, why can’t we back currencies with goods or services?
DACs may be simultaneously viewed as crypto-currencies and unmanned businesses. As businesses, they perform services intended to be valuable to their customers. Such services might include money transmission (Bitcoin), asset trading (BitShares), domain name services (DomainShares), or a thousand other business models sure to emerge as people realize that DACs are not mere “altcoins”.
DACs pay for the services they need (like computer resources and bandwidth) with shares of their own company “stock”. They charge for their services using those same shares. Finally, they transfer all profits they earn to their shareholders denominated in those same shares. To the extent that their services are in demand, those same shares will be in demand. Just like a brick and mortar and flesh and blood company.
To the outside world a DAC is nothing but a crypto-currency backed by the value of the services it provides. But as owners of shares in a DAC, you may be entitled to a share of the profits that DAC earns from providing those services. Every DAC will have its own terms and conditions. You can always choose to view your DAC shares polymorphically – either as spendable coins or as shares in a profitable, perhaps dividend-paying business. Just like light can be viewed as both a particle and a wave.
Bitcoin itself can be viewed as an early form of DAC. We are generalizing the concept for use in the open source community, building on Bitcoin's proven technology. Bitcoin could be reimplemented as a full open standards-compliant DAC. Perhaps someday it will." (http://invictus-innovations.com/i-dac/)
2. The Economist:
"Imagine a corporation that engages in economic activity without guidance or direction from humans. Programmed with a mission statement—maximize profit for shareholders from the sale of widgets, for example—the corporation could own capital, enter contracts, and employ robots. People could even be hired for more creative tasks. Such an entity would live on the Internet, distributed across thousands or millions of nodes (stakeholders who host the DAC on their computer).
DACs hold the potential to reduce friction in many markets, allowing for instantaneous, trust-less business transactions across the globe. Near-term applications of the DACs concept include peer-to-peer bond and stock trading, verifiable-yet-anonymous voting, and decentralised currency exchange. A DAC also wouldn't have to employ a board of directors, and a CEO's hefty pay cheque could be returned to shareholders in the form of dividends.
Programmed with an incorruptible set of publicly-available business rules (open source code), a DAC would be more trustworthy than a human-run corporation. You could, of course, develop firms with more dodgy practices in mind, but, as Dan Larimer of Invictus Innovations explains: "although DACs can still be designed to have a robotically inviolable intention to rob you blind, to enter the open source arena they must be honest about their plans to do so."
The concept of a DAC first appeared on a Bitcoin forum in 2011, and interest in them has increased over the past year. In fact, Bitcoin's blockchain model—a cryptographically-secure open ledger of all transactions distributed to every node—was the critical innovation that opened the door to DAC research." (http://www.economist.com/blogs/babbage/2014/01/computer-corporations)
Distributed Autonomous Corporations have many advantages. DACs are...
- Corporations – They are, and of a right ought to be, free and independent persons.
- Autonomous – once up to speed; they no longer need (or heed) their creators.
- Distributed – there are no central points of control or failure that can be attacked.
- Transparent – their books and business rules are auditable by all.
- Confidential – customer information is securely (and incorruptibly) protected.
- Trustworthy – because no interaction with them depends on trust.
- Fiduciaries – acting solely in their customers’ and shareholders’ interests.
- Self-regulating – they obey their own rules like, well, robots.
- Incorruptible – no one can exercise seductive or coercive influence over them.
- Sovereign – over their digital resources. They don’t need governments to exist."