With the crypto market making a crazy comeback this year, an increasing number of casual investors all over the world are beginning to understand the potential that blockchain technology possesses. For example, over the course of 2020, decentralized applications gained a remarkable amount of traction, with the total locked volume across all decentralized exchanges rising from under $40 million back in December 2019 to a whopping more than $26 billion within a span of just nine months.
However, it’s important to understand the core concepts underlying decentralized finance, or DeFi, and decentralized applications, or DApps, as many routinely use the two terms interchangeably. For starters, while both innovations share many similarities — such as using blockchain technology, eliminating third-party intermediaries, and providing users with complete control over their finances — there are a few key differences that are worth pointing out.
One key distinction is that DeFi is a form of DApp, with DeFi primarily being concerned with financial use cases, whereas general DApps have a wide range of applications that are not limited to the domain of finance alone. For example, DApps can be used for the development of gaming and gambling platforms and educational systems, or even in the creation of novel tools like privacy-oriented internet browsers such as Brave.
Why DApps, you ask?
From a usability standpoint, DApps can be deployed for all of the same purposes that regular smartphone apps are good for. However, the difference lies in the fact that unlike most Android and iOS-based applications that make you sign shady agreements essentially forcing you to forgo your basic privacy rights, DApps offer users a wide array of transparency-related benefits — along with other advantages such as:
- They are open source: As is implied by the term “decentralized,” DApps are open source, meaning their source code is freely available online and can be redistributed or modified…