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Daimon

The words daemon, dśmon, are Latinized spellings of the Greek δαίμων (daimon), used purposely today to distinguish the daemons of Ancient Greek religion, good or malevolent "supernatural beings between mortals and gods, such as inferior divinities and ghosts of dead heroes" (see Plato's Symposium), from the Judeo-Christian usage demon, a malignant spirit that can seduce, afflict, or possess humans. This notion of the daemon as a spiritual being of a lowly order that is largely evil and certainly dangerous has its origin in Plato and his pupil Xenocrates; when the later connotation is read back anachronistically into Homer, the result is distorting: "To emancipate oneself from Plato's manner of speech is no easy matter", Walter Burkert remarked.  Daemons scarcely figure in Greek mythology or Greek art: like keres their felt but unseen presence was assumed. There was one exception: the "Good Daemon" Agathos Daemon, who was honored first with a libation in ceremonial wine-drinking, and especially in the sanctuary of Dionysus, and whose numinous presence was signaled in iconography by a chthonic serpent.

In Hesiod Phaethon becomes a daimon, de-materialized, but the ills of mankind released by Pandora are keres not daimones. Hesiod connects the daimones of the deceased great and good in relating how the men of the Golden Age were transmuted into daimones by the will of Zeus, to serve as ineffable guardians of mortals, whom they might serve by their benevolence. In similar ways, the daimon of a venerated hero or a founder figure, located in one place by the construction of a shrine rather than left unburied to wander, would confer good fortune and protection on those who stopped to offer respect.

Thus daemones ("replete with knowledge", "divine power", "fate" or "god") were not necessarily evil. Plato in Cratylus (398 b) gives the etymology of δαίμονες (daimones) from δαήμονες (daēmones) (=knowing or wise). In Plato's Symposium, the priestess Diotima teaches Socrates that love is not a god, but rather a good daemon. In Plato's Trial of Socrates, Socrates claimed to have a daimonion, a small daemon, that warned him against mistakes but never told him what to do or coerced him into following it. He claimed that his daemon exhibited greater accuracy than any of the forms of divination practised at the time. The Hellenistic Greeks divided daemons into good and evil categories: Eudaemons (also called Kalodaemons) and Kakodaemons, respectively. Eudaemons resembled the Abrahamic idea of the guardian angel; they watched over mortals to help keep them out of trouble. (Thus eudaemonia, originally the state of having a eudaemon, came to mean "well-being" or "happiness".) A comparable Roman genius accompanied a person or protected and haunted a place (genius loci).

After the time of Plato, in the Hellenistic ruler-cult that began with Alexander himself, it was not the ruler but his guiding daemon that was venerated, for in Hellenistic times, the daimon was external to the man whom it inspired and guided, who was "possessed" by this motivating spirit. Similarly, the first-century Romans began by venerating the genius of Augustus, a distinction that blurred in time.

Source:  http://en.wikipedia.org/wiki/Daemon_(mythology)