Frequently Asked Questions
Decentralized applications (dApps) are digital applications that run on a blockchain or peer-to-peer network of computers instead of a single computer. They are outside the purview and control of a single authority.
Key characteristics of dApps include:
- Open-source code
- Decentralized operation
- Cryptographic tokens for access
- Consensus mechanism for verification
To use a dApp, you typically need:
- A cryptocurrency wallet (like MetaMask, Trust Wallet, or Phantom)
- The native cryptocurrency of the blockchain the dApp runs on (for transaction fees)
- Any specific tokens required by the dApp
Steps to use a dApp:
- Install a compatible wallet
- Fund your wallet with the appropriate cryptocurrency
- Connect your wallet to the dApp
- Follow the dApp's specific instructions
While dApps built on blockchain technology offer security benefits through decentralization, they can still have vulnerabilities. Safety considerations include:
- Smart contract vulnerabilities
- Frontend security issues
- Phishing attempts
- Regulatory uncertainty
Best practices for safety:
- Research the dApp before using it
- Check if the smart contracts have been audited
- Start with small amounts
- Be cautious with wallet permissions
- Use hardware wallets for large holdings
Decentralized Finance (DeFi) refers to financial services built on blockchain technology that operate without centralized intermediaries like banks. DeFi applications allow users to:
- Lend and borrow assets
- Trade cryptocurrencies
- Earn interest on deposits
- Get insurance
- Create synthetic assets
- Participate in prediction markets
DeFi aims to create an open, permissionless, and transparent financial system accessible to anyone with an internet connection, regardless of location or status.
Non-Fungible Tokens (NFTs) are unique digital assets that represent ownership of a specific item or piece of content on the blockchain. Unlike cryptocurrencies, each NFT has distinct value and cannot be exchanged on a one-to-one basis.
NFTs can represent:
- Digital art
- Collectibles
- Music
- Videos
- Virtual real estate
- Game items
- Documents and certificates
NFTs provide verifiable ownership, provenance tracking, and new ways for creators to monetize their work directly with their audience.