Business,Operations,Guide,Module 1.3
Module 1.4
Legacy vs Decentralized Paradigm
To put these concepts in perspective, let’s compare some legacy systems with their blockchain-based counterparts used at Bittrees:
Record-Keeping
In traditional operations, records (financial transactions, ownership, identity, etc.) are kept in databases or on paper, often requiring paperwork, manual reconciliation, and trust in institutions. In a blockchain system, records are kept on a tamper-evident ledger shared by many. This is like moving from a filing cabinet of contracts to an immutable digital ledger. For example, rather than issuing paper stock certificates, a DAO might issue digital tokens on Ethereum to represent ownership or voting rights.
Contracts and Enforcement
Traditional contracts rely on legal systems and manual enforcement (signatures, notaries, courts). Smart contracts execute automatically according to code – enforcement is baked into the transaction. This shift is akin to having a piece of software (the smart contract) replace the role of an escrow agent or a legal enforcer for many routine agreements.
Governance
In a conventional company, governance might involve board meetings with votes recorded in minutes and approvals that then get implemented by executives. In a DAO like Bittrees, proposals are posted on a platform (e.g., Snapshot) and token holders vote digitally; if a proposal passes, actions (like fund disbursement) can sometimes be executed automatically or via agreed-upon multi-signature transactions (see Module 5). The process is more direct and transparent, with votes recorded on the blockchain rather than in meeting notes. We’ll dive deeper into DAO governance later.
Security of Assets
Traditionally, valuable assets or cash might be kept in a physical safe or bank vault, requiring perhaps multiple signatories or keys for access (think of a safety deposit box that needs two keys – one from you and one from the bank). In the crypto world, security comes from cryptography: only someone with the correct private key can move assets from a blockchain address. We also implement multi signature digital safes to mimic the shared control of a vault (this will be covered in Module 3 on Gnosis Safe). The phrase “not your keys, not your coins” encapsulates the idea that holding your own keys (self-custody) is analogous to having the keys to your own vault, rather than trusting a bank’s vault.
In summary, decentralized systems replace or augment legacy processes with code, cryptography, and consensus. This provides unprecedented transparency, security, and efficiency but also introduces new responsibilities (e.g., managing your own keys). The following modules will build on these concepts and show how they are applied in practical operations at Bittrees, Inc.