In the first two parts of this series, we talked about what the basic workings of a decentralized autonomous corporation might look like, and what kinds of challenges it might need to deal with to be effective. However, there is still one question that we have not answered: what might such corporations be useful for? Bitcoin developer Jeff Garzik once suggested that one application migh be a sort of decentralized Dropbox, where users can upload their files to a resilient peer-to-peer network that would be incentivized to keep those files reliably backed up. But aside from this particular example, what other applications might there be? What are the industries where decentralized corporations will not simply be a gimiick, but will rather be able to survive on their own merits and provide genuine value to society?
Arguably, there are three major categories where this is the case. First, there are the natural monopolies. For certain kinds of services, it simply makes no sense to have many hundreds of competing offerings all working at the same time; software protocols, languages and to some extent social networks and currencies all fit into this model. However, if the providers of these services are not held in check by a competitive market, the question is, who does hold them in check? Who ensures that they charge a fair market price for their services, and do not set monopoly prices thousands of times above what the product actually costs to produce? A decentralized corporation can theoretically be designed so that no one involved in the price-setting mechanism has any such incentive. More generally, decentralized corporations can be made invulnerable to corruption in ways unimaginable in human-controlled system, although great care would certainly need to be taken not to introduce other vulnerabilities instead; Bitcoin itself is a perfect example of this.
Second, there are services that violate government laws and regulations; the use of decentralized file-sharing networks for copyright infringement, and to a much lesser extent the use of Bitcoin on sites like Silk Road, are both examples. As Satoshi Nakamoto put it, “Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.” Finally, there are those cases where a decentralized network can simply maintain itself more efficiently and provides better services than any centralized alternative; the peer-to-peer network used by Blizzard to distribute updates to its massively multiplayer online game World of Warcraft is perhaps one of the purest examples.
The rest of this article will outline one particular idea for a decentralized corporation that can potentially open up a number of new possibilities in cryptocurrency, creating designs that have vastly different properties from the cryptocurrencies we see today while still staying close to the cryptocurrency ideal. The basic concept is this: Identity Corp, a corporation whose sole purpose is to create cryptographically secure identity documents for individuals that they could sign messages with, and are linked to individuals’ physical identities.