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dApps are a brand-new way to connect with your personal finances. Money lending, borrowing, savings, and other such things spring to mind when one thinks of traditional finance. A central authority, such as banks or other financial organizations, is in charge of each of these. When it comes to the future of finance, however, many people think of cryptocurrencies and blockchain as examples.

What are dApps?

dApps, or decentralized applications, are smart contract-powered blockchain-based versions of apps popularized by the Ethereum network. They behave exactly like traditional apps - a user shouldn't be able to tell the difference - but they have a far larger feature set.

There are three types of dApps.

dApps on the first layer exist on their own blockchain. This sort of dApp is used by the most popular applications, such as Bitcoin. They, for example, necessitate a consensus algorithm and built-in regulations.

Layer-two dApps are typically developed on top of layer one, utilizing the blockchain's capability. Tokens are used for interactions, and they are frequently referred to as protocols. A layer-two dApp is an example of a scaling solution built on top of Ethereum. Transactions may be processed on this second layer before being committed to the first, relieving the main chain of some of the load.

Finally, layer-three DApps are constructed on top of layer two, and they often retain the data that allows the other two to communicate. It may contain the application programming interfaces (APIs) and scripts required for layer one and layer two to function properly. A layer-three protocol, for example, may hold many layer-two DApps, easing the user experience across them all.

Why should I use dApps?

Decentralization has a number of advantages versus apps that run on a centralized network. The unique smart contract eliminates the need for a third party. Although an app like Venmo allows users to send money to anyone, transferring funds to a bank account incurs a fee. Furthermore, shifting fiat often takes days to arrive.

When sending money using a decentralized app, however, there are no, or very little expenses involved. Users save money on fees, and because decentralized transactions are practically instantaneous, they also save time.

DApps, on the other hand, do not run on centralized servers. Because there is no physical equipment to target, decentralized platforms are invulnerable to all types of attacks.

Where are dApps used?

DApps can be used in a variety of industries, including gaming, medicine, governance, and even file storage. As a result, DApp usage is nearly identical to that of standard apps. While all of the changes on the backend help users, the actual experience should remain the same. Web 3.0 refers to this approach of connecting with programs, as well as the decentralization of information.

At OneCrypto, we have decided to present you current topics of the crypto world via the YouTube channel Whiteboard Crypto.

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