What is a DAO?
Before buying DAO you must understand the concept of the DAO. The DAO stands for Decentralized Autonomous Organization and it’s a tricky concept to wrap your head around if you aren’t familiar with the dynamics of blockchain and digital currencies. Even for the most savvy, this concept needs some explaining so luckily the good folks over at The Bitcoin Podcast have tracked down Stephen Tual, the former ethereum COO and founder of slock.it (the company who created this organization) to get us all up to speed on what it is.
We highly recommend that you take a listen.
A brief explanation of DAO
The basic concept is that slock.it has created the DAO and the DAOhub.org deployed the decentralized autonomous organization that is owned by the DAO token holders and nobody else. The DAO token holders will vote on what they want to fund, how to govern, and so on. As I understand it, the original plan of buying slock.it tokens was abandoned recently because the guys at slock.it did not want to be liable.
So, basically, the work-around was to create this DAO (shoutout to Vitalik Buterin) and then once it is up and running the slock.it team will propose their business model of a shared economy (think uber for everything) and the token holders will vote to see if they want to go ahead and fund the project, how much money they want use for it and so on.
The DAO tokens are being offered until May 28, 2016 and for the next five days you will be able to buy 100 tokens per 1 ethereum. After five days the price will steadily climb until no more tokens are offered for pre-sale. The DAO tokens will then be traded on bittrex.com, gatecoin.com and presumably many more exchanges.
Now, slock.it is the first known entity that will be contacting the DAO to fund their “shared economy” business model. Examples of this shared economy include renting your bicycle when not in use, your internet while you are away at work, or subletting your parking spot. You will have the option to increase the rates during surge times and lower it when the demand is low and so on. It’s such a new concept that really nobody knows what will happen but it is an exciting development and interest is there.
The most ironic thing about slock.it creating the DAO is that after six months of hard work they could actually not benefit from the DAO if the DAO ends up not accepting their proposal! Maybe another company will come in and offer a similar plan and undercut the originators of the DAO. This is an unlikely scenario considering most people will trust the slock.it team to operate their model considering they’ve spent more time than anyone studying and developing the business model. Really, I think all the slock.it team did was huddle up with some lawyers and figure a way to not be legally responsible if slock.it goes haywire.
How much interest is there for this DAO?
Well, in it’s first three days of initial public offering the token generated over $13 million dollars! As of this writing, it is already the most crowd funded digital currency ever, surpassing it’s own master – ethereal. It’s also the second most crowdfunded project ever in the history of the modern world according to wikipedia, topping out at about $28 million currently and there are still three more weeks to go.
So, even though there is much trepidation about what it is, is it safe, will it take over the world, etc., the basic psychology of investors is that they think it will be a great project or they think they will at least make some money off of flipping the tokens down the line. We tend to like it based on who is operating it, the ethereum folks, and the fact that a whole new economy could be built off this DAO.
Keep in mind that the DAO will have many projects offered to it besides the shared economy model of slock.it, we just aren’t sure of what’s to come but we are super excited for our new decentralized, robot friend organization and its future.
Buying DAO can be a bit tedious because from the basic start you have to convert fiat currency into bitcoin, then buy ethereum using bitcoin and finally buying DAO with ethereum. The quickest and easiest way to purchase DAO is to set up a wallet at myetherwallet.com and transfer your ethereum to the wallet. The website has easy directions to follow and makes it real quick and simple to set up the wallet. If you don’t have any ethereum yet, you will need to purchase some at poloniex.com (using BTC,) gatecoin (BTC or fiat accepted,) or one of the many other exchanges offering ethereum these days.
I personally would recommend poloniex as it is the easiest to navigate for newcomers to the digital cash world. After you have purchased the ethereum ($ETH) then you can go to the poloniex transfer page and click “withdraw” on the ethereum tab and send it to your myetherwallet.com wallet address. Once you’ve done that then open your wallet (using the JSON encrypted format) and you will see your ethereum show up after a few minutes. Next, click on the “Buy DAO” tab and you can purchase the DAO. Make sure you leave a little bit of ethereum in your wallet (.5 should suffice for now) to pay the gas prices too.
(editor’s note: special shoutout to GrifffGreeen for helping clarify the DAO deployment on the newly created subreddit r/theDAO)