DAPPs and WEB3 wallets: Decentralized Applications — what is it and how to access them?

Thumbnail: Introduction to dapps and WEB3 wallets

Three competitive advantages

In the following we will take a closer look into the characteristics, which make dapps attractive for business activities and our society as a whole:

Programmable business logic

While bitcoin is mainly focused on the use-case of a peer-to-peer cash (aka. digital money) other platforms enable the execution of potential unlimited use-cases, since these platforms are designed to solve any reasonable computational problem. The elephant in the room here is Ethereum, which offers a Turing complete virtual machine. As a simplification, you could imagine a “world-computer”, which can be accessed by anyone and strictly follows the rules embedded in the protocol. Everybody who got the knowledge can translate business logic into code and the Ethereum network will execute it. The program code is stored directly within the blockchain and is then referred to as smart-contract. While not legally binding like a normal contract, these programs can be used by everyone leading to an open network of different applications built on top of each other. Hence, Dapps can leverage existing infrastructures and business logic within an execution platform with “fixed” rules. This enables an extreme level of innovation fueled by business- and process automation.

Direct ownership: Self-custody

One of the key aspects fueling the rise of decentralized networks is the aspect of ownership. Traditional financial assets like bonds, stocks, derivatives, etc. are held by third parties, which offer access to the financial service. Bitcoin introduced the concept of self-custody by owning and possessing the private key of the respective coins. Self-custody wallets enable users to hold and manage assets without the risk of being confiscated or blocked by a third party or a government. People increasingly feel the necessity to control the custody of their property. Dictatorships, the financial- or more precisely the fractional reserve system — and general violations of human rights forces individuals to search for new solutions of property management. The most used standard to represent a digital ownership is the ERC721 standard, which is also called NFT: Non-Fungible Token. Basically, a unique token, which can’t be copied and is attached to a certain asset like an artwork, an in-game item like a skin or an invoice.

Decentralization & censorship-resistance

Permissionless blockchains enable the execution of business logic without interference from third parties like powerful corporations or governments. Bitcoin & Ethereum are the best examples of a censorship-resistant platform. Over time smart entrepreneurs and coders have built useful financial services with engaging user-interfaces (UI) on the Ethereum network. This enables dapps to function without complying with cumbersome regulations such as KYC, AML, CTF, GDPR and also liberate developers from illicit business practices of apple and google, which have a huge control of the market for mobile applications. This not only streamlines the user-experience (UX), but also allows these types of applications to reduce operating and compliance costs. Taking a small portion of the transaction as revenue, costs reductions can be forwarded to the end-consumer. However, the degree of censorship-resistance and third-party interference varies from platform to platform and is highly dependent on the used consensus mechanism such as POW, POS, DPOS, BFT, etc.

Smart contract platforms:

Besides of ethereum, there are quite a few other networks enabling dapps, namely: EOS, Tron, Steem, Block Stack, OST, Steem, Waves, Neo and cosmos among others. However, none of these platforms can compete with the status-quo of ethereum in regards to the combination of available dapps, documentation, user-base, general adoption and degree of censorship-resistance. If you want to know more about Ethereum check out Ethhub.io.

Ethereum: Use cases & implementations

We can observe developments in different areas such as finance, gaming, marketplaces etc. Here a collection of dapps I deemed worth checking out:

The “crypto war”

There are quite some people who believe only one network or coin is the true one and all the others are scams. Community hotspots like Telegram, Twitter, Discord, and members of highly specialized forums sometimes share the same mindset, but more often big debates about the fundamentals erupt.

WEB3 Wallets & Dapp browsers for ethereum

DEF: WEB3 wallet: A self-custody wallet enabling access to the 3rd generation of the web including the usage of dapps. Web3 wallet is really just a browser added to the regular self-custody wallet enabling the usage of dapps.

An overview of the self-custody wallet providers in the WEB3 ecosystem.

Mobile:

Note: UX = User experience, UI = User interface

Hardware wallets:

Ledger: While not supporting dapps directly, you can use e.g. the Ledger Nano S to access Compound and other dapps as Chris Blanc explains. Ledger SAS is headquartered in Paris and has the best track record of all hardware wallet providers.

Smart contract wallets: (mobile application)

Gnosis Safe: Dapp access via wallet connect, Gnosis Ltd is registered in Gibraltar and mainly operates from Berlin.

Other:

Portis: SDK (software development kit) solution with WEB2 login experience, cookies required, based in Tel Aviv, ownership structure unclear.

Example: Knownorigin.io

Known origin provides different WEB3 login options: Metamask, Wallet Connect, Portis and Formatic

About the author:

Adrian is trained technician and currently finishes his international business studies in Germany. He already worked as blockchain adviser for financial institutions as well as for the self-custody wallet provider HTC EXODUS. Hodl Helper is student side hustle and has no sponsors or similar. Feel free to support his independent content creation by donating to hodlhelper.eth

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Educational content about self-sovereign identity with focus on Europe. Content by Adrian Doerk