DISTRIBUTED LEDGER TECHNOLOGY (DLT) a corporation saviour? Are there limitations? If so, what?

Blockchain and distributed ledger technology (DLT) have generated much excitement over the past decade, with proclamations that they would disrupt everything from elections to finance. Also, the much-maligned corporate world is considered ripe for disruption. While undoubtedly imperfect and currently serviced by creaking legal infrastructure premised upon direct shareholdings, is the corporate world problem one of centralisation/intermediation?

In a 2022 paper [chapter], Kelvin F.K. Low, Edmund Schuster, and Wai Yee Wan [the authors]:-

• Propose to expose the ignorance behind the hype that the venerable corporation will either be:-
• Revitalised by distributed ledger technology (DLT) or
• Replaced by Decentralised Autonomous Organisations (DAOs).
• Demonstrate that proponents of DLT disruption either:-
• Overestimate the potential of the technology by taking at face value its claims of security without unpacking what said security entails (and what it does not) and/or
• Show a lack of awareness of the history of and market demand for intermediation as well as the complexities of modern corporations.  

THE AUTHORS CONCLUSION

• The blockchain and DLT space is replete with resplendent promises.
• It is unsurprising, given public dissatisfaction with large corporations, that some of these extend to revolutionising the corporate form.
• However, it is pertinent to observe that, some 14 years after the pseudonymous Satoshi Nakamoto introduced the blockchain concept and sparked cryptomania, practically all these promises have remained unfulfilled or metamorphosized into an unrecognisable form. To mention but one, the promise of a decentralised non-fiat currency has descended into a speculative investment perhaps better characterised as unlicensed gambling.
• Although the potential is mainly imagined, the hype is real.
• Those who do not invest the time to understand the technology properly and those unfamiliar with the real challenges of the corporate form and its historic and economic roots are at risk of being lulled by the siren call of the cryptoverse, where every misunderstood problem and each under-analysed path dependency has a standard solution—the blockchain.
• We will thus be unsurprised by the greater use of DLTs in corporations and the formation of more DAOs in the coming years.
• What we do not expect to see is either “innovation” solving any genuine problem. If anything, some seem doomed to resurrect the dreadful ghosts of past corporate depravities.

READ THE WHOLE PAPER.

• https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4258114
• https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID4274677_code1413313.pdf?abstractid=4258114&mirid=1

Distributed Ledger Technology (DLT) and Decentralised Autonomous Organisations (DAOs) are both key concepts in the realm of blockchain and decentralised systems, but they serve different purposes and have distinct characteristics:

Distributed Ledger Technology (DLT)

• Definition: DLT refers to a digital system for recording the transaction of assets in which the transactions and their details are recorded in multiple places simultaneously. Unlike traditional databases, distributed ledgers have no central data store or administration functionality.
• Functionality: DLTs record transactions securely and transparently across a network of computers. Each participant (or node) maintains a copy of the ledger, and updates are made through consensus mechanisms.
• Examples: Blockchain is the most well-known type of DLT, but there are others, such as Hashgraph, Directed Acyclic Graph (DAG), and Holochain.
• Decentralization: While DLTs can be decentralised, the degree of decentralisation can vary. Some DLTs may have centralised control over certain aspects, while others, like blockchain, aim for complete decentralisation

Decentralised Autonomous Organisations (DAOs)

• Definition: DAOs are organisations represented by rules encoded as transparent computer programs, controlled by organisation members, and not influenced by a central government. They operate on blockchain technology.
• Functionality: DAOs use smart contracts to automate decision-making processes and governance. Members can vote on proposals, and decisions are made based on the consensus of the community.
• Purpose: DAOs are designed to enable decentralised governance and management of projects, funds, or organisations without the need for traditional hierarchical structures.
• Legal and Regulatory Aspects: DAOs face unique legal challenges, as their decentralised nature can complicate regulatory compliance and liability issues

In summary,

• DLT provides the underlying technology for secure and transparent transaction recording,
• DAOs leverage this technology to create decentralised governance structures for organisations.

Both are integral to developing decentralised systems but serve different roles within that ecosystem.

Source

• Identifying the differences between 'Distributed & Decentralized .... https://landvault.io/blog/distributed-and-decentralized-systems.
• Decentralised Autonomous Organizations: Targeting the Potential Beyond .... https://blogs.law.ox.ac.uk/oblb/blog-post/2024/03/decentralised-autonomous-organizations-targeting-potential-beyond-hype.
• We Can DAO It! Navigating Legal Challenges and Solutions for .... https://techlawpolicy.com/2024/12/we-can-dao-it-navigating-legal-challenges-and-solutions-for-decentralised-autonomous-organisations/.

The company and blockchain technology - Kelvin F.K. Low, Edmund Schuster, Wai Yee Wan - Paper source

• https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4258114
• https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID4274677_code1413313.pdf?abstractid=4258114&mirid=1