DAOs, NFTs and the future of Web3.0
DAOs are a new form of organization that operates on the blockchain. They are autonomous and run without any human supervision or control. DAOs can be set up to run themselves in a pre-programmed way, with rules embedded in the code, which cannot be broken by humans or by outside interference.
NFTs are a type of digital assets that exist on the blockchain. They can be bought, sold, or traded with others. NFTs are stored in a decentralized ledger, which is accessible to anyone who has access to the internet.
Both DAOs and NFTs are amongst the hottest topics on the space of blockchain right now. So, we thought we’d interview Paul Dowiling to learn more about this subject.
Our Guest: Paul Dowling
Paul Dowling is the Founder and CEO of Mindstream AI. Paul has over 30 years experience of working in technology and management consulting firms. He has also spent the last 10 years working with startup founders and investors in the European technology startup eco-system. He is a regular speaker at international startup events and mentors several leading accelerators. Paul is passionate about the potential for large and medium sized organisations to innovate through artificial intelligence and insights gained through data science.
Paul, what does Mindstream do?
PD:| Mindstream AI is a startup and it is a startup that is involved in Data. Our role is mainly to work with other companies in the ecosystem and try to help Data driven startups that want to grow and also help large corporations that might want to access some of the innovation which is coming from those startups. And then finally, we have an arm of our company that is helping people upscale with Data skills.
Do you know anything about DAOs and NTFs?
PD:| Yes! So I have a second company that is called Dreamblocks and Dreamblocks is a Web 3.0 company that has the future intention of structuring itself as a DAO. DAO stands for Decentralised Autonomous Organisation and to create those companies is quite complex. You don’t just register a company the normal way, you basically create a community first and then you take that community and use the community to design the future structure.
So, at the stage that we are at with Dreamblocks, which is a relatively new company, is that we have created the initial community and we are due to have a meeting to start thinking how the company is going to be structured.
You also asked about NFTs, which I am very familiar with, because I am also an artist. Although my art is not normally digital, as most artists I have spotted the potential of NFTs, which is to add value to digital art, so I have been experimenting with digital art and NFTs. But I am also interested in some of the wide aspects of NFTs.
How do DAOs come into Blockchain & what do they do?
PD:| I think DAOs are one of the potential use cases of Blockchain. So Blockchain is really the underlying infrastructure that drives cryptocurrency like Bitcoin, but it also has this second ability which is to be able to decentralise organisations. And what you can do with Blockchain is you can create smart contracts which themselves are the bases of DAOs so there is an integral linkage between Blockchain and DAOs.
How does AI & Data science fit into NFTs & Blockchain?
PD:| Well I think when we talk about AI and Blockchain we are getting into the most advanced use cases because what we are talking about is two very complex technologies in their own right and what we are looking at is the intersection between the two. I think it is very important because what is happening with Artificial Intelligence is that we are utilising Data in an increasing and maybe invasive ways, that could be easily manipulated by people or end up in the hands of the wrong people.
So, I think where Blockchain starts to come in, this is not directly or necessarily linked to Machine Learning, but it will be in some cases, but more to the point it’s a way of dealing with people’s Data in a more equitable manner, in a way in which they could be rewarded for their own Data.
For example you can own you own Health Data and, even though owning your own health Data is not necessarily use case for AI in its own right, it’s only your own Data, but what can then be done is that you can provide your Data to someone who can then put Machine Learning on top of it to create insights and be able to discover new drugs, for example, and things like that.
Where will DAOs be in 5 years from now?
PD:| So I think that there are very complex ideas and very complex visions around what Web 3.0 should look like which are quite easy to talk about but quite hard to implement. Well if you look at talks from Davos yesterday or if you are looking at something like Polka Dot which is a Blockchain they are really talking about how do we avoid the mistakes that have been made in Web 2.0.
So, what is happening with Web 2.0 is we have centralised Data and we have given the power of the Data to the people who own the company like Facebook, Instagram and all the Web 2.0 companies. We have got the advantage of seeing what went wrong with Web 2.0 and now what we need to do is we need to use these new structures to do it in a much more equitable way but it is easier said than done so I think to answer your questions where will it be in 5 years time?
Well in five years time we would have ironed out some of these problems that will allow us to be able to somehow balance questions like freedom of speech with flexibility and speed and all the things we take for granted with Web 2.0 and we would have figured out how some of that technology works in practice, because I think at the moment we are in the very very early stages just taking little baby steps with these technologies.
What are the benefits of DAOs?
PD:| For me the benefits are that they allow a more equitable structure that allows more people and more stakeholders to be rewarded in a more even way. So again when you compare it to Web 2.0, the problem with Web 2.0 at the moment is that a founder is allowed to make a lot of money by his venture capital and the venture capital will make a lot of money as well.
There is a symbiotic, biotic relationship between the VC and the founder that says let’s go out and make as much money as we can, but what happens is that when they write the contracts for the rest of the team and so on and so on it gets less and less extractive. When you get right down to, for example, the drivers on Uber, by the time it gets down to them they are just employees and they have no real ownership of the startup.
I think what DAOs do is that they bake-in the rules of the game right from the very beginning and they don’t allow those rules to change, except in very exceptional circumstances where there is some kind of agreement, so it doesn’t allow the founders to slide out of their commitments as the company develops and actually gets better as a company develops because of all the voting mechanism.
So, in the case of a Web 3.0 Uber, the drivers would have more power. And the other thing is, that it bakes-in the incentives mechanisms, so right from the very beginning it says if you are a driver and follow this kind of behaviour you get a little more of the tokenized tokenization through tokenization and therefore you are rewarded for good behaviour as the company grows.
How do you set up a Decentralised Autonomous Organisation?
PD:| Right! Well, the questions are getting increasingly hard, aren’t they? Well, it is hard for most people to understand but especially hard for me to understand. So there are mechanisms for creating DAOs, I mean they are really effectively a legal structure and then lawyers are beginning to understand more and more how they can be set up. A DAO really has to be designed by the community itself. I think people would like to pay lip service to DAOs and would like to gather a small team, just like a normal management team, and create a DAO; but that just would be another way of creating a team in the old sense.
So I think to create a DAO in a true sense I think you probably have to think of the mission you are trying to tackle and it could be anything from, let’s just take an easier one: Climate Change. You should first build your community around Climate Change and should tell them in the future you will be creating a DAO, but you need to get some consensus before you start to design the DAO and then you need to take that community, or a subset of that community, and that needs to be the community that designs what the DAO looks like. Because a DAO really is a set of rules basically: if this happens then that will happen and those rules need to be baked-in from the beginning.
How much does it cost to set up a DAO?
PD:| I haven’t a clue! Ha, ha.
Is NFT worth investing in and where do you think it will reach in the near future?
PD:| I think first of all there is an artist’s view of this and then I think secondly there is a business view of this which is different. I think from the artist’s perspective, at a really really simple level what NFTs have allowed to happen, for digital artists is to monetize their work in a way that has not been possible before. But it doesn’t solve the problem that, like all art, it’s only a very tiny parentage that has artistic merit.
So it does not suddenly give you artistic merit that you didn’t have before, but what it does is, let’s say out off 100 digital artist, like out of 100 normal artists, there will be 5,1 or 2 that create great art and now, where as before it would have been shared randomly round the Internet and they would have not got much reward from it, now they can actually create rarity for that art and, because of NFTs will now start to have true value and high value.
But what a lot of people are believing is that the other 90 people who got no talent can also suddenly create value, which actually at the moment is just speculation value, so it is really people who don’t understand that. But it is slightly better than that, because what it also does is that it allows you, whether you got talent or not, to use the NFT effectively as a token. So as long as you add enough utility to your art work it could be the art work is worth 0 really but the utility is actually worth something on top of it and you just use the NFT as a token.
So, coming back to the Climate Change example, you could create a set of 20 Climate Change images that may not particularly have a huge artistic merit, but people might buy those because they believe in the cause. Because if you say every NFT is worth £50, if you buy one of those you are giving £50 to Climate Change NFT, which goes directly in to the utility. And that utility can be something serious like Climate Change, but it can also be something quite frivolous, like entertainment. It could be your a raper and you want someone to buy your NFT, so again you might not be buying it because of its merit, you might be buying it partly because of its merit, maybe it is a music NFT so maybe you are buying it because of its music, but actually you are also buying it because what ever else the raper has added to it.
So, he might add that you get the right to meet them at every concert, or you have the right to come to every concert without paying. And you can trade that, and that’s the other good thing about NFTs, that they have a secondary value that once you bought them, then other people can buy whatever utility is in that NFT and therefore they are tradable. As where you think of a standard piece of artwork once the artist sells it, that’s it. They can’t keep tracking that piece of art when it is worth millions they cant come back and say I was the original artist, give me 10% of that million but with NFT’s it does.
What’s the connection between NFTs and cryptocurrency?
PD:| My gut feeling is to say that the connection should be somewhat avoided, I mean they are enabled by the same technology and there is a risk, I suppose, that they might get too associated, for example they could become a speculative item, they could become very close to a currency. In other words if somebody knows that a certain type of NFT is always going to go up in value then it becomes just like a currency, but that should not really be the aim of an NFT. I think the aim of an NFT should be almost the opposite to that. It should really be about what the artistic merit or utility of it should really be the thing that prevails, rather than just seeing it as another currency.
What makes an NFT valuable?
PD:| So i think it is either artistic merit in its own right, it can have a huge value. We all know a great art work is worth a lot of money. Or it is the extra utility in it. Or if you are really lucky it can be both artistic value and extra utility.
How do NFTs work in properties and decentralised home rentals?
PD:| So first I will dissect this question a little bit, because I don’t think it is just NFT’s. We can say this is more about Blockchain and there are two use cases that are separate. So actually one thing that is becoming very large is real estate on the metaverse, so I think this is where more NFT comes in.
So the NFT could be a token to buy real estate in the Metaverse which is already happening. I met with a company that has already sold £8m of Metaverse real estate. But then of course there is the use of Blockchain and Smart Contracts to take out the middleman out of the property buying process and that’s probably the most exciting one really, because property is a great example of having to pay a bunch of people a lot of money, for really doing very little, just because it is a complex process, and up to now requires middlemen to play a part in it because of the questions of trust and things like that. You and I can buy a house but we are not really allowed to do that, because there is no automation, or there is no validation and trust built into that process.
So we go and get lawyers and we get state agents and others to whom we have to pay a very high percentage before we can buy a house. The theory would be if you put real estates, either rentals or sales, on to Decentralised Models with Smart Contracts: if you did A and I did B then the contract would be sealed by the Smart Contract.
It will basically track what we do and it would be able to validate things like ownership of the land because that would all be put on the Blockchain. It would not need a surveyor to come and say “you own this land”. It will just be there on the Blockchain, a unique piece of land you own and then that enables the process of buying and selling.