This is part 5 of a series of short cryptocurrency “explain it like I’m five” posts. If you’re just joining us, start here: Crypto ELI5 Part 1: What is a blockchain?
This series of blog posts is meant for the absolute beginner in cryptocurrency. They are also meant to be concise and easy to understand. If you’re interested in learning about crypto, some of the history of crypto, and how to get started with using crypto, follow along! We’ll be adding a new post daily and each post will build on the one previous to it.
What is a DAO?
DAO is an acronym for Decentralized Autonomous Organization. A DAO is a blockchain protocol that is governed by a set of rules, created by elected members. Because these rules are embedded in computer code and are executed automatically when specific conditions occur, there is no need for an intermediary.
The rules defined by the protocol, not only guide participants’ behavior, but also create automated consensus. This speeds up network decision making and lowers management costs.
Because the protocol can be very complex, changes require writing new code and approval by network consensus.
Check out the next installment in this series: Crypto ELI5 Part 6: What is Proof-of-Work?
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