Blockchain noun: A system in which a record of transactions are maintained across multiple computers that are linked in a peer-to-peer network.
"Transactions" can include any data, not strictly financial. "multiple computers" decentralizes authority, requiring consensus and preventing any single party from altering the rules, this permission-less infrastructure also prevents censorship.
What is a DAO?
A DAO is a Decentralized Autonomous Organization, DAOs are pre-programmed rules between multiple parties that functioning autonomously and are executed through a distributed consensus protocol (like the ethereum blockchain). DAOs are also open source, which means their code can be viewed by anyone, and since all of the rules and transactions are recorded in the Blockchain DAOs are fully transparent, immutable and incorruptible. To help understand how DAOs work think of a vending machine, an automated facilitator between merchants and consumers, when certain conditions are met ($1 is added and buttons D4 are pressed), certain protocols are executed (slot D4 releases 1 soda bottle). Of coarse to be a true DAO a vending machine would need a programmed financial structure that re-orders snacks, pays stockers, cleaners, rent & taxes. Furthermore it would have to be owned and governed by a network of peers, one example of this is each slot (A1-D5) being individually rented where the renter pays their share of the operational costs for the right to; set prices, select snacks, and take profits for their slot. Alternatively the vending machine could be owned and governed equally by its customers so that anybody can suggest and vote on changes and the system can operate without a profit, undercutting competing machines.
DAO Development:
Bitcoin was introduced as the worlds first true DAO, one program, a specific application that aimed to create decentralized digital currency, built using the underlying blockchain technology. Ethereum was created as an application layer, allowing any program to be written and executed on the blockchain. To understand this think of blockchain as electricity, when it was first introduced into homes, electricity was only used for lighting (Bitcoin) until its further potential was realized and electrical outlets (Ethereum) began making their way into homes, allowing for a variety of appliances to easily tap into the underlying technology, still new applications are being built using electricity everyday. Similarly for the first two years the internet was available to the public it was indistinguishable from Email (which was invented 20 years before the World Wide Web). Again, over time the true value of the internet was discovered and the ecosystem grew rich with various websites.
It's not a perfect analogy but these examples show how new technologies can be undervalued at first, indistinguishable from their initial limited applications, but primed to grow overtime as more unique applications are discovered/developed. It's important to note that because DAOs are open source and require majority consensus to change/update they need to be built with bulletproof code triple checked for vulnerabilities.
