Difference Between Dapps, Crypto Wallets and Smart Contracts
This article focuses on discussing the differences between dApps, digital wallets, and smart contracts. The following topics will be discussed here:
- What are dApps?
- What Are Crypto Wallets?
- What Are Smart Contracts?
- dApps vs Digital Wallets vs Smart Contracts.
Let’s start discussing each of these topics in detail:
What are dApps?
A decentralized application is referred to as dApp. They run on a peer-to-peer network based on the distributed nature of Blockchain.
How dApp work?
dApps are higher-level applications that use smart contracts to deliver their functionality. A smart contract is a shot piece of logic that is saved and executed by machines on the blockchain.
- dApps, like other applications, are made up of multiple technologies. A technology stack similar to what one would see in a typical web application.
- dApps need web hosting to store and run application files, server software to operate program logic, a database to store data, and a user to interact with the web apps front-end via a browser.
- The only difference with dApp is that the database files and much of the application logic aren’t stored or executed on a single machine or server. They are stored on the blockchain network and executed on it.
- The blockchain protocol oversees the concurrent execution of computer code, ensuring that the same security that protects transaction data on the blockchain also protects the application code.
Decentralized applications that are distributed are particularly resistant to attacks and have high fault tolerance. Because they are embedded in a blockchain, they have direct access to the blockchain’s capabilities and value structures, such as Tokenized ownership and identity management, which make user authentication and payment processing super easy.
What are Crypto Wallets?
A crypto wallet is software that enables sending and receiving cryptocurrencies. The wallet is more like a key chain that stores the records of the transactions and carries private keys that are each coupled with a public key address than it is a wallet that holds Bitcoins.
- One can keep as many keys in the wallet as desires.
- A private key is a string of letters or numbers that is cryptographically linked to a public key address.
- It can be proved to the Bitcoin network that one holds the coins linked with the matching public addresses using the private keys.
- To use the information in the wallet on the network, one will need to use some kind of software like Metamask, ZenGo, etc.
- The wallet doesn’t contain currency, it contains keys.
What Are Smart Contracts?
Smart contracts are pieces of code that allow the blockchain to immediately transport or move data. These are the instructions on how and when data should move. Combined with the other aspects of the blockchain, these instructions become useful because no central authority is required to approve the instructions.
- Smart contracts can operate with a variety of other technology including banking services, IoT, etc.
- This adaptable technology can be programmed to work with a variety of sectors and can be used in a variety of scenarios.
- Smart contracts are similar to agreements in that they allow participants to see if certain requirements and conditions were met.
- If the pre-set criterion or conditions are not met, smart contracts have the potential to ‘digitally lock’ an asset.
How do smart contracts work?
Smart contracts can be thought of as self-executing pieces of code, but there are certain distinctions to be made.
- When smart contracts operate on a blockchain, they must be initiated with a fee.
- Smart contracts do not run unless they are initiated.
- When they are initiated, they all run at the same time on all machines participating in the network.
- Given that all the computed are running at the same time, the nodes within the blockchain come to a consensus (By consensus, we mean that a general agreement has been reached.
- In regards to blockchain, the process is formalized, and reaching consensus means that at least 51% of the nodes on the network agree on the next global state of the network) on the results of the code.
dApps vs Crypto Wallets vs Smart Contracts
Below are some of the differences between dApps, digital wallets, and Smart contracts:
|Definition||A dApp is a decentralized application. It can be fully or partially decentralized.||It is software that enables sending and receiving cryptocurrencies.||A smart contract is a short piece of logic that is saved and executed by machines on the blockchain. The logical bricks of decentralized apps are smart contracts.|
To try a dApp a wallet is required and some ETH.
|Examples||ChainLink, KYC-Chain, etc.||Metamask, ZenGo, Coinbase, etc.||Smart contract cryptos are Polkadot, Ethereum, Ergo, etc.|
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