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A decentralized autonomous organization (DAO) is an entity in a digital system facilitated by smart contracts. Smart contracts involve digital tools and protocols that help support specific transactions or other contract elements. The decentralized autonomous organization works with popular cryptocurrency and digital ledger operations that many world governments and businesses are moving toward for more transparency and for evolving anti-corruption innovations.
The ledger technology called blockchain began as a component of the cryptocurrency bitcoin. In blockchain, a digital ledger system provides an immutable record and transparency of financial movement. Within this model, the decentralized autonomous organization utilizes the ledger and cryptocurrency tools through the smart contracts that help to abstract and customize its interactions with stakeholders. Practical examples of decentralized autonomous organizations have shown how these models can be used for the purposes of venture capital allocation and other kinds of business.