So now that we know what Dapps or decentralized applications are, let's talk about how we can actually 1
create them and what new opportunities they offer us. 2
So as we mentioned, dapps are the backbone of Web3. 3
This is how we're going to bring about the next iteration of the Internet by creating these decentralized 4
applications. 5
And this brings about a huge change in the way that companies are formed and new tech startups are built. 6
For example, in the old way, you'd first build your start-up, build the technology, deploy it, 7
and then raise VC funding. 8
Hopefully they like your idea and they like your product. 9
And then you would at some point down the line, if you're really lucky, maybe IPO and cash out. 10
Now in the new Web3 way, we're looking at something that completely flips this model of creating 11
businesses on its head. 12
In this case, you're building your startup, you're building the technology, but then you can already 13
start releasing tokens to the public or to funds like VCs, and you can start selling tokens that enable 14
people to use and interact your technology. 15
And you're able to start raising money for your dapp from day one. 16
And the way that you run your company is also transformed by the blockchain because you can form what's 17
called these decentralized autonomous organizations, which kind of replaces the board of directors 18
as well as the entire organizational chart of a company. 19
So you can have people who are token holders. 20
They're special tokens called governance tokens, which allows you to vote on what the company or 21
the dapp should do in the future. 22
So in these DAOs, you're able to start controlling how the company functions and you allow users to 23
contribute to the roadmap of your decentralized application. 24
And in a way, everybody's incentives are aligned, because if this application does really well, then 25
the token price will go up, 26
it'll become more valuable. 27
And in order to do that, the company has to do valuable things, which means that you have to make 28
good decisions. 29
So everybody in the DAOs is incentivized to participate and try and help the organization along. 30
Now, what does it mean for you as an individual entrepreneur? 31
Now, let's say that you decided to build Dropbox and you build a really great product. 32
You raise a series A funding 33
after coming out of Y Combinator, you are literally the hottest thing on the block and you managed 34
to raise a total of $6 million. 35
And this at the time was really, really huge. 36
It was a really successful fundraising round for Dropbox. 37
Now, if you don't know what Dropbox is, it's basically a way for you to store your files off of your 38
computer on the cloud, somewhere else, so that you're able to access it no matter where you are. 39
Kind of like Google Drive today. 40
So Dropbox has this amazing funding round. 41
But let's compare that to a Web3 competitor. Filecoin does pretty much similar to what Dropbox 42
does. 43
It allows you to store all your files in a decentralized way in the cloud, 44
but instead of having it hosted by a single company, namely Dropbox, it's actually hosted across millions 45
of computers across the Internet. 46
And that way you have a massive amount of redundancy and you able to retrieve your file no matter where 47
you are, as long as you have access to the Internet. 48
Now, they raised an initial coin offering, which is where they allowed the public to buy up their 49
coins, which they had minted. 50
And in this initial coin offering, they managed to raise $257 million, which makes Dropbox's $6 million 51
suddenly look very, very little. 52
So when you're creating decentralized apps, you're able to raise funding earlier and oftentimes raise 53
even more than through traditional means, like going to venture capitalists or going to angel investors. 54
And the future of decentralized applications is really exciting. 55
Anything you can imagine that revolves around a trustless system that is decentralized, that allows 56
both the users as well as the creators to benefit, can be achieved. 57
So, for example, instead of having Uber drivers being ripped off by Uber, you could have user-and- 58
driver owned version of Uber, where everybody who is driving for the company or using the company to 59
get around is able to get access to the tokens to govern, to determine, how the company should be 60
run and also effectively own shares in that company 61
once it gets more and more successful. You can also realize crazy ideas like you could have racing 62
games on the internet and everybody puts in, you know, maybe a dollar in order to participate in the 63
game and then at the 64
end of the game, you have cash prizes going towards those who have won the game. 65
Now, another really massive benefit of Web3 is pseudonymity. 66
This idea that you can be identified by a handle or by a username, where you can have your privacy, 67
you don't have to reveal your real name or your address or where you live, but you can create things 68
that benefit other people and be recognized and rewarded by your pseudonym. 69
And this is a great equalizer because it means it doesn't matter who you are, what race you are, what 70
gender you are, how old you are, 71
you're able to be recognized for what you do rather than who you are. 72
For example, I saw this article in Forbes where they interviewed three teenagers who created a decentralized 73
finance project called Rari Capital, which makes lending and borrowing on blockchain easier. 74
And they're only 18 or 19. 75
Imagine trying to get VC funding when you're only 18 and you haven't even gone to university. 76
And when these guys started out building on the blockchain, they were actually only 16. 77
And I remember how hard it was to be taken seriously when I was 15 or 16, whenever I had to call somebody 78
or when I had to show up somewhere 79
and they they sort of looked at you like, you are so young, like, what could you possibly know? 80
But instead, you know, with pseudonymity, you can build for the web3 and it doesn't matter 81
if you're 12 82
as long as you're able to produce valuable things, people will recognize and respect you and you can 83
raise funding and be judged only on your work. 84
So now I hope you're ready and pumped to start building Dapps. 85
So where do we start? 86
Well, the first thing you'll encounter is you have to make a choice. 87
You have to pick a chain to build on. 88
Do you go for Avalanche or Polkadot or Solana? 89
How do you choose? 90
Well, currently the largest number of dapps are built on Ethereum 91
and this is just because it was the first one around. 92
It was the first chain which had these smart contracts, and you can write code that can be embedded 93
into the blockchain. 94
But Etherium has a number of fundamental problems that prevents it from being a good choice for creating 95
Dapps for web3. 96
And the biggest problem is scaling. 97
You can't store data on Ethereum, and it's very costly to perform computation on the Ethereum network. 98
So, for example, Nfts, which are minted on Ethereum, are not even stored on the blockchain. 99
Instead, what you get is a URL and the actual data, the actual image for the NFT is stored somewhere 100
else. That somewhere else could be using ipfs through file coin 101
but often the images for an NFT are just stored on a company's private servers owned by, say, Amazon 102
AWS. 103
So the biggest problems with developing decentralized applications on Ethereum is the fact that it's 104
very costly to do computation on there. 105
It's very costly to store anything on there, and it's nearly impossible to actually have a proper back 106
end with a database, which is why a lot of decentralized applications running on Ethereum are actually 107
made up of a patchwork of different services. 108
For example, even the website follows a dapps with all their CSS, JavaScript and images are usually 109
hosted on Amazon AWS. 110
So this is where the Internet computer comes in. 111
Back in even 2014, where most of us were not really aware of the blockchain or how it works, or even 112
had the smarts to buy a bitcoin, 113
the team at Dfinity started building the internet computer and the idea is to build a scalable cloud 114
computer that runs on a blockchain. 115
So it has all of the benefits of a trustless decentralized system, but also it allows you to perform 116
fast computations, store data directly on the blockchain and to be able to create fully-fledged applications 117
on chain. 118
So this is what we're going to be working with in this module to create decentralized applications. 119
And in the next lesson, I'm going to talk a bit more about how it works and how we can get started 120
building decentralized apps on it.