Distributed ledger technologies utilising “blockchains” are set to change the legal industry and the industries in which our clients operate. The cryptocurrency Bitcoin is an early application of this technology.
Please go online and look for the TED talk by Don Tapscott: “How the blockchain is changing money and business“.
DAOs – Decentralised Autonomous Organisations – are a fascinating example, and just may be the way businesses are run in the future. DAOs are organisations run mainly through computer coding and smart contracts. A DAO’s records and program rules are securely held on a blockchain for all stakeholders in the organisation to access, review and verify.
Take a General Manager of a DAO who is tasked by the Board with purchasing a new fleet of vehicles. She simply uploads her recommendation to purchase the vehicles to the DAO on her smartphone or tablet. The Board considers the recommendation and vote, again on their smartphones or tablets. The coding and smart contracts of the DAO are triggered once a Board majority is reached. The DAO automatically sends out the purchase order to the vehicle dealer, which then sends back its invoice. That is recognised and confirmed by the DAO, which requests the deposit funds from its bank and those are paid to the dealer. When the vehicles are ready for delivery, the dealer notifies the DAO and it directs its bank to pay the balance of the funds to the dealer, and confirms the delivery instructions. The DAO adjusts the organisation’s accounting records and asset register. The DAO minutes the Board’s resolution. The DAO informs the General Manager and the Board that the transaction is complete. The entire record of the transaction is recorded on the DAO’s blockchain.
These activities normally involve multiple levels of human interaction, reporting, cross-checking and paperwork. The DAO requires only minimal interaction at the outset by the General Manager and the Board. Imagine the efficiency and productivity gains that may be achieved. It’s all a bit frightening as well on a number of levels, much like people must have felt 100 years ago with the invention of motor cars! The social, ethical, legal and regulatory consequences to this technology are still to be developed.
Everingham Solomons will be monitoring these exciting developments for our own business and also for our clients because Helping You is Our Business.
Click here for more information on Keiran Breckenridge