Like many other more recent cryptocurrency platforms, Aragon uses the Ethereum Virtual Machine (EVM) in order to use and distribute particular applications on the blockchain, in a decentralised and automated manner. In particular, it allows users to set up virtual companies, called DAOs (Decentralised Autonomous Organisations), which are managed by smart contracts. The blockchain system manages thus every function users might need for their decentralised company, including payroll, accounting, governance, etc.
Smart contracts with Aragon (ANT)
Whereas cryptocurrencies, such as Bitcoin, use the blockchain to log particular transactions between users, platforms like Ethereum and Aragon have broadened the use of the blockchain. They include not just simple transactions, but also more multi-faceted applications. Smart contracts are an example of this; rather than logged transactions, they are lines of code on a blockchain that function in an “if this, then that” algorithm.
When a user interacts with such a smart contract, this can, for example, cause a certain calculation, launch an application, or send a transaction to another account. Smart contracts are user-created “if…then” snippets of code, capable of running entirely independently, according to the rules of the code and the blockchain.
Advantages for smart contracts
Using smart contracts for the creation of companies has a number of advantages which traditional companies do not have; these are the key reasons behind Aragon’s recent success.
Firstly, a company created on a decentralised blockchain such as Aragon exists outside of traditional jurisdictions; it cannot be taxed by local governments, it cannot be taken over or restricted by corrupt authorities, it can become competitive and internationally successful regardless of who the entrepreneur behind it is, or where this person hails from.
Secondly, this method is both cheaper and more straightforward than a system based on traditional contracts: it cuts out the middleman, who otherwise could be corrupt or need to be compensated, and it also has no room for ambiguity, in that smart contracts simply carry out their code regardless of context.
At the same time, Aragon also uses smart contracts to provide a system of digital jurisdiction, meaning that in case of human disagreement, a digital court can make the necessary decisions to solve the problem. This is once again a neutral and automated, consequently unbiased, body.
In order to use the Aragon platform, users need a certain amount of ANT (Aragon Network Token), the Ether-based currency whose value is being set to 66 ANT for 1 ETH.
Although Aragon as a system strives to work in a decentralised manner (thanks to smart contracts), it still has a group of developers at its center, hence the currency couldn’t be mined like the Bitcoin or Ether. Instead, it must be purchased either through regular token sales from the central developers – which are organised in order to raise money for further development of the Aragon platform – or via exchanges, for either traditional currency or other cryptocurrencies. As opposed to currencies such as Bitcoin, there is no ceiling foreseen for the total number of ANT, sales being unlimited and users being able to purchase as much currency as they wish.