Guide to Blockchain Development – NFTs, DAOs, dApps

Have you ever wondered how a digital artwork could be worth more than a Picasso? This is the blockchain era, a reality where such extraordinary accomplishments are not just possible but increasingly common.

According to the Harvard Business Review, the blockchain solution could do for finance what the internet did for media. However, as the technology matured, it also transformed, and new applications were created that could be further adapted to more industries. From the birth of Bitcoin in 2008 to the recent sensation in the digital art world, blockchain has evolved from a niche concept to a groundbreaking force that’s poised to revolutionize industries far beyond its financial origins. In this guide, we will take you through the mysteries of NFTs, DAOs, and dApps. You’ll discover how these components are crucial cogs in the blockchain revolution.

Let’s learn more about it and see how they might help companies and startups improve or create new money-making methods.

Introduction to blockchain technology

There are now dozens of digital currencies known as cryptocurrencies. They have revolutionized how we think about and handle financial transactions.

Before Bitcoin, there were only two forms of monetary transactions: direct cash payments and transactions mediated by a third party. However, governments and central banks centralize or regulate these transactions. This indicates that the value of our money fluctuates owing to external pressures such as inflation. Other dangers are associated with cash payments and third-party transactions. Account information can be compromised. Furthermore, doing transactions through a third party exposes the transaction to observation. You may not always know who is now gaining access to information about you and your transactions. Cryptocurrency gets around all of that by allowing users to save, transfer, and receive money through decentralization and a secure mechanism.

A blockchain, also known as Distributed Ledger Technology (DLT), is a continuously expanding list of entries that are safely connected to one another via encryption. Imagine a chain of data blocks, each securely linked to the next through advanced cryptographic methods, including digital signatures and hash functions. This ensures that each transaction is not only secure but also permanently recorded and verifiable. Every participant or node holds a copy of this ledger in a blockchain network, ensuring transparency and immutability. Whenever a new block is added to the chain, it undergoes rigorous algorithmic validation, upholding the entire system’s integrity.

What’s exciting is that blockchain isn’t just for digital currencies. It’s a versatile tool. It can protect healthcare records, verify identities securely, and make online transactions safer. This versatility of blockchain opens the door to one of the most fascinating and rapidly evolving areas: Non-Fungible Tokens, or NFTs.

NFTs

Although the first NFT was minted in 2015, it gained widespread popularity at the beginning of the 2020s, and now most people have at least heard the buzzword without knowing what it exactly means. For those who don’t know, NFTs is an abbreviation for Non-Fungible Tokens. To clarify, “non-fungible” means it cannot be easily exchanged. The best example to understand is a 1 euro coin, which is fungible since it can be exchanged for another 1 euro coin. In contrast, an NFT is unique, like a one-of-a-kind painting, with its distinct value. But how can they be further applied to the business perspective?

The real power of NFTs lies in their versatility and how they’re being integrated into various sectors. For instance, Chiliz uses the NFT technology to tokenize the sports and entertainment sectors. They do so by creating a fan engagement platform that allows the team to gamify the team management. They use NFTs to create collectibles for partner clubs that they can later sell to their fanbase.

Another example is the use case in the fashion industry that was first introduced by Dolce & Gabbana. They released a new collection that included five NFT products with their physical equivalents and four fully digital products. From the sale of this collection, they generated revenue of $5.7 million.

Yet again, another use case that enterprises might implement is the use of NFTs as a representation of physical assets. One example is the solution created by Koinearth that allows them to create products as NFTs that later allow them to track them across their supply chains.

As we delve deeper into the impact of blockchain technology, we transition from the unique world of NFTs to another groundbreaking concept: Decentralized Autonomous Organizations (DAOs). DAOs represent a shift in organizational structure, taking blockchain to democratize decision-making.

DAOs

DAOs (Decentralized Autonomous Organizations) are organizations that are brought to life by blockchain technology and smart contracts. They are another example of how this technology might be used.

The basis of this business model is the creation of organizations where most of their workflow is managed through smart contracts that are executed based on predefined conditions that eventually execute proper entry into the blockchain ledger. The decisions in such an organization are democratized, meaning the network users may vote on the specific action, and smart contracts are responsible for executing it. Most of the DAO’s uses are investment projects, where users can raise capital and then mutually invest in various other projects.

ConstitutionDAO is a well-known DAO. Its goal is to get enough money from contributors to buy an original copy of the United States Constitution. Although DAO raised 47 million, it fell short of its goal due to a slight loss in the auction to another bid. However, it demonstrated the potential to change how people crowdfund and purchase items via DAO.

Another example worth mentioning is VitaDAO, whose goal is to collect funding for early-stage research projects related to longevity that can later be transformed into biotech companies. Through DAO architecture, they can collect funds and collectively decide upon which projects should be funded. The intellectual property of the research can be further monetized, generating income for contributors or a base for the next research funding. As of today, they have raised over $2 million in funding and identified over 200 research projects.

We also encounter another fascinating application of DAOs: decentralized applications, or shortly dApps. These are not just applications in the traditional sense but ones that are built on blockchain.

dApps

dApps are nothing more than decentralized applications. As with regular applications, they are built from the frontend interface. However, the backend side comprises smart contracts connected to a particular blockchain like Ethereum or Solana.

The main difference between centralized applications and blockchain is that blockchain’s code doesn’t run on centralized servers but rather in a more decentralized way. Aside from the benefits of the blockchain itself, some of the benefits of dApps include higher uptime because they are more protected from DoS attacks, privacy, and resistance to censorship.

One example of a dApp is Chainlink, which serves as a middleware software for Oracle networks that provides tamper-proof inputs, outputs, and computations. Currently, the solution is being tested by Google for use in a BigQuery PaaS data warehouse.

Another example is Brave, a web browser with almost 9 million users. It attempts to disrupt the online advertising model by giving power back to consumers through measures of consumer attention rather than clicks or views. Thanks to the blockchain-based backend, it aims to give more control and privacy back to users, which is becoming a rising trend after the rollout of GDPR.

Developing your blockchain technology project

Fintech, supply chain management, and real estate are all being transformed by blockchain applications. It’s essential to keep up with the revolution that’s happening. What is most important when you build a blockchain app is the focus on security and blockchain developers’ experience in creating smart contracts. Check out Applover’s recent case studies – the platform for settling cryptocurrency transactions as well as the crowdfunding platform that empowers individuals with benefits through LUCA coins.