Slock.it For Investors #3 – What Is A Decentralized Autonomous Organization (DAO)?

Interviewer:

So there’s going to be a pre-sale and then there’s going to be probably a certain time until they come out. What is your thought on that?

Ok so they have what’s called a roadmap and so let me just run through this briefly with you even though it’s on their website, some people don’t like to read, some people can’t read, so I’m just going to go through really summarize it really briefly.

So June 2015 is when I guess they conceived the idea of Slock, and then November 12th, 2015 according to their timeline, they revealed their Slock project at a conference called DEFCON 1 in front of 400 blockchain developers and enthusiasts, so that’s when it was first introduced publicly.

And then early 2016, they are going to have their DAO token sale. Now DAO stands for decentralized autonomous organization. What that fancy term means is that it is a company or a business that is running on top of the blockchain. Most businesses are run by people. Your business is run by people. But this business is going to be… imagined that robot but instead of a robot, it’s a software.

And the reason why that’s important is that humans can make errors and make mistakes but when you program the software to do a certain task it’s going to do it. So they are going to do something that’s I believe is very revolutionary and I strongly believe in.

They are going to start the first decentralized autonomous organization which means that they are going to start the first basically automated business on top of the blockchain which I think is fantastic because then there is 100% transparency in what the organization is doing.

We don’t have to rely on crooked CEOs, we don’t have to rely on the crooked executive, we don’t have to rely on people patting the numbers and erasing their accounting ledgers and rearranging numbers to make it suit their needs.

This will all be public so that everyone can read it and understand it and follow along. And it’s going to be operating entirely autonomous and transparent. And then the DAO, well I’ll just call it the “DAO’ from now on. And this is the DAO in cryptocurrencies, this is not the ‘Dao’ that’s related to the Chinese philosophy of Taoism, so make sure you guys understand that. It’s spelt the same but it doesn’t mean the same.

The DAO will vote on a contract with Slock. It, it’s the first service provider, to execute on a series of core objectives in the physical world to be reviewed at irregular intervals. Now that’s a bunch of fancy freaking technical terms, what it means is that the DAO will be monitoring the Slock. It team to make sure that their software project is done on time, otherwise, it won’t get paid.

That’s what it means, or at least that’s what I believe it to mean, so I could be wrong on that. But based on my research that’s what I have understood it to mean, is that the Slock. Its team will not get paid or will not get the funds they need until they complete certain milestones and certain task for the software.

There has not been an exact date yet to set when the Slock. It will have their initial coin offering or their ICO or their presale so that’s why I say just sign up with their newsletter and they will announce it, so I will know at the same time that you guys know.

And then that’s their timeline, their roadmap, so in the next few weeks here and when I say next few weeks, I don’t know the exact time here, but it’s supposed to be early and then late in 2016, later on, this year, they will have the early version of the Ethereum computer into the market and then to reward the participants who help bring to life, the DAO tokens grant rewards whenever the connected objects it produces generate revenue.

So this is a lot of different guys. This is extremely important. What all that mumbo jumbo text means is this, in late 2016 when the Slock project becomes successful, anyone who buys in, who invest their Bitcoins or their Ethereum or whatever into the project at the beginning when it’s the riskiest and you don’t know if it’s going to succeed or not and you don’t know these guys going to get hit by the bus and the whole project fails and you lose all your money.

What it means is that when the project does succeed and it starts to generate an income and make money, they are going to pay, and it’s not ‘they’ as humans, it’s the software, the Ethereum blockchain that holds the decentralized autonomous organization.

The Slock DAO will pay out the dividends or the profits to basically… I would not say, shareholders, because there are no shares involved but it would pay profits out to the token holders. So whoever holds the Slock tokens, they will be the ones that we see the revenues from the business.

I’m trying to make it as simple as I can for the people on the streets. Trust me I can’t make it any harder because I am not smart enough, technical enough to make it any harder than that. So here are a few of the things I want you guys…

Because if you’re watching this, chances are you’re watching this to see, to get, to do research and get information on whether or not you should invest. That’s the only reason why you guys are watching this, that’s the only reason why you ask me these questions.

So here’s the thing that I want you guys to understand. There is some risk involved guys. So let’s talk about the risk and the rewards that are involved. One of the risks is that they say that they’re going to collect the Bitcoins from you in early 2016, but there’s no software coming out until late 2016. So what that means is that there’s going to be almost a year’s worth of time that goes by where nothing happens.

So if you put money into this project and you invest into their initial coin offering, you’d better be prepared for that for a year there will probably nothing happening and there’s going to be pretty much… from a non-technical perspective, you might as well consider like radio silence for nearly a year.

So you won’t know what they’re doing because they will release, they will update everyone in the technical community what they are doing with the project, but I’ve learned something during the Ethereum.

When I invest into Ethereum, they will release notices of how and updates of where they’re at on their Ethereum project, but the stuff is so technical that it’s just a waste of time to read it for someone as non-technical like myself.

So even though where they release updates to the public on what they’re doing and their progress is, when you read it, it’s like reading Chinese, or like reading Arabic or something, you don’t know what the hell they’re saying.

That’s why I say that during this time period, from the time you give your money to them into the time that you finally understand what’s going on, where they make it public, that I would say like a year’s worth of time where it’s a massive amount of risk.

Because you don’t know what’s going on, because there’s like it’s almost like maintaining radio silence and you can’t talk to the people because even if they talk back, you don’t understand what the hell they’re saying. So just be aware of that.

To avoid, to reduce some of this risk, one of the things I recommend or…no wait a minute, I can’t recommend because I’m not a financial advisor. One of the things is that if you look to invest in this ICO, you’d better do it with an amount of money that does not hurt you.

In other words, if you plan on putting a thousand dollars into it, let’s just say that you put a thousand dollars into it, and you never ever see that thousand dollars again. You have to ask yourself is that going to hurt you? Is that going to kill you? Are you going to be homeless? Are you going to be living under a bridge? Are you going to be here in Boston knocking on the doors of the World Bitcoin Network headquarters asking for a place to stay?

You, James, says if you come over knocking his doors he’ll give you some quiche and some food but you aren’t staying here with him. So just be aware of those guys on that. There’s a massive amount of risk. For example, when my friends and I invested into Ethereum, everybody looks at it now and they say that we’re geniuses, James calls Leonfu.com and our team of panellists here, he refers to as the Warren Buffett, the Peter Thiel of cryptocurrency investing.

But keep in mind guys, even though James jokes about that with us, just be aware that, there was nearly a year and a half, almost over a year’s worth the time where I had no clue what the Ethereum guys were doing even though James, myself and Leonfu.com were sitting there at the Texas Bitcoin Conference interviewing Vitalik Buterin.

Leon and James might have been technical enough to understand what they’re doing but as far as me, I was just sitting in the dark until they started trading the actual tokens on the Ethereum network. Then at that point, that’s when my trading skills were able to kick in and then now I can understand what’s going on.

But before then, there was over a year, almost a year and a half when I kept thinking to myself like the man I hope I made the right decision. This guy Vitalik looks like a sharp dude. This is a huge risk. It’s the first time. So there’s a lot of risks involved. So make sure that you guys put money into this. Make sure that it’s money that you can afford to lose. Any other questions about the risk?

Interviewer: James, you have any questions?

James: No, I think you covered that pretty good.

So let’s talk about the reward, the potential reward. From our experience of investing into cryptocurrencies, we have noticed that when you invest into it, you are not trying to look for a 5% return or a 10% return. If you are investing in cryptocurrencies, you are looking for like a 100% return, a 100% profit is often referred to as 1x, 200% profit would be referred to as 2x.

The X stands for time so 2 times or 5 times would be a 500% return or a 10x would be a thousand per cent return on your money or a thousand per cent profit. So if you put in a thousand and it grew to 10x that means that you would have a total of 10 thousand dollars at that point.

So now with the Ethereum investments that we did, it grew over I think 50x…40, 50x somewhere around there so the reward is huge if you are willing to take the risk for something like that.

Now when I invest in the cryptocurrency and my buddy Leonfu.com and Eric invest in cryptocurrencies, we do not set our target for a 40 or 50x return. We set our targets and we are very very happy if we are able to make a 10x return. So that’s the potential reward.

If you are new to cryptocurrencies and you listen to this or you have never invested into an ICO before or a pre-sale of this nature, this is something that you might want to consider and be aware of. Most of the new cryptocurrencies that come out, usually there is more than 1x return on your money. I don’t remember any cryptocurrency that we invested in that you could not get a 3x minimum return out of it.

But here’s the problem that you went into. Just because you make a 3x return or 5 or 10x return on your money does not mean that you can cash it out immediately. Sometimes you make a 5 10x return but the liquidity is so low. There are not enough people trading it that you cannot unload what you have, so you have to wait.

Sometimes you’re at a 10x return and by the time you finish unloading it and cashing it all out, it might only be a 6 or 7x return because the volume in all these cryptocurrencies is very very low. Does that make sense? So just be aware that.

On paper, it might show that you might make a 10x return but when you cash it out into your currency, whether it’s cashing out into Bitcoins. most everybody has to cash out into Bitcoins. I don’t think there’s anybody… I know that you can cash out into US Dollars or into Euros or anything like that.

I know today there was a huge jump in the Ethereum price. There was a huge run up from I think like 20 to 24. I think it was 23. It ran up from like 26 27 millibit and it ran all the way up to as high as 34 millibit as I’m making this video.

And that was because there was an announcement that came out from the very popular exchange called Bitfenix, which is the biggest Bitcoin exchange. They announced that they were going to open up trading starting on Monday which is in about two days. They open up trading of Ethereum into Bitcoins or Ethereum into US dollars. So that’s huge news because Bitfenix has been around for a while and they’re the biggest Bitcoin change. So for them to announce that Ethereum is going to be traded on there. That’s going to open up more opportunities for people to trade.

So do you think, based on the success of Ethereum, that this is going to be hugely successful too?

We never know. But the people that are behind it, keep in mind that the developers of the Ethereum team, they don’t want anybody to fail, so all the people are involved in the Ethereum. This is one of those things guys where everybody wants everyone to succeed whether it’s the Ethereum team.

They want the Slock team to succeed. The Slock team wants other teams that are like for example, like Augur, we’ll talk about that in a different video, they want the auger team, the prediction market team to succeed. So everybody wants these first generations of applications that go on top of the Ethereum blockchain. They want them all to succeed so it’s not like they want anyone to fail.

So like in the regular business world, I believe in the regular business world, one restaurant may want another restaurant to fail so they can get all the customers and stuff. But in the cryptocurrency world, it’s so new that the success of one team or one application also transfers and bleeds over to the other teams, so they want everybody to succeed.

So they’re all going to try to help each other and work together to succeed. So that’s why it’s a little bit different than investing in like a regular business when you’re investing in a cryptocurrency. Any other questions? Any? No? Alright great.

Well, I will wrap it up and if we have any other additional questions or concerns, if you guys have any other questions, so I just want you guys to remember guys, if you guys invest in this, there is a huge potential for reward. But make sure that you do your due diligence. I’m just sharing this video with you guys so that you guys don’t have to… it’ll save you guys some time. It will help you get started. When I invest in any kind of cryptocurrency guys… hold on how much time do I have left.

Interviewer: You have almost 33 minutes into it.

Let me wrap up these video guys and I’ll make a separate video a different time because the camera is running out of battery here guys. So thanks for watching this video guy. If you have any questions or comments, make sure that you leave it in the comment section below and if you haven’t subscribed to this channel, make sure you subscribe.

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