So now that we know what DApps or decentralized applications are, let's talk about how we can actually
create them and what new opportunities they offer us.
So as we mentioned, DApps are the backbone of Web3.
This is how we're going to bring about the next iteration of the Internet by creating these decentralized
applications.
And this brings about a huge change in the way that companies are formed and new tech startups are built.
For example, in the old way, you'd first build your start-up, build the technology, deploy it,
and then raise VC funding.
Hopefully, they like your idea and they like your product,
and then you would at some point down the line, if you're really lucky, maybe IPO and cash out.
Now in the new Web3 way, we're looking at something that completely flips this model of creating
businesses on its head.
In this case, you're building your startup, you're building the technology, but then you can already
start releasing tokens to the public or to funds like VCs, and you can start selling tokens that enable
people to use and interact your technology.
And you're able to start raising money for your DApp from day one.
And the way that you run your company is also transformed by the blockchain because you can form what's
called these Decentralized Autonomous Organizations, which kind of replaces the board of directors,
as well as the entire organizational chart of a company.
So you can have people who are token holders.
They're special tokens called governance tokens, which allows you to vote on what the company or
the DApp should do in the future.
So in these DAOs, you're able to start controlling how the company functions, and you allow users to
contribute to the roadmap of your decentralized application.
And in a way, everybody's incentives are aligned, because if this application does really well, then
the token price will go up,
it'll become more valuable.
And in order to do that, the company has to do valuable things, which means that you have to make
good decisions.
So everybody in the DAOs is incentivized to participate and try and help the organization along.
Now, what does it mean for you as an individual entrepreneur?
Now, let's say that you decided to build Dropbox and you build a really great product.
You raise a series A funding
after coming out of Y Combinator, you are literally the hottest thing on the block, and you managed
to raise a total of $6 million.
And this at the time was really, really huge.
It was a really successful fundraising round for Dropbox.
Now, if you don't know what Dropbox is, it's basically a way for you to store your files off of your
computer on the cloud, somewhere else, so that you're able to access it no matter where you are.
Kind of like Google Drive today.
So Dropbox has this amazing funding round.
But let's compare that to a Web3 competitor. Filecoin does pretty much similar to what Dropbox
does.
It allows you to store all your files in a decentralized way in the cloud,
but instead of having it hosted by a single company, namely Dropbox, it's actually hosted across millions
of computers across the Internet.
And that way you have a massive amount of redundancy and you able to retrieve your file no matter where
you are, as long as you have access to the Internet.
Now, they raised an initial coin offering, which is where they allowed the public to buy up their
coins, which they had minted.
And in this initial coin offering, they managed to raise $257 million, which makes Dropbox's $6 million
suddenly look very, very little.
So when you're creating decentralized apps, you're able to raise funding earlier and oftentimes raise
even more than through traditional means, like going to venture capitalists or going to angel investors.
And the future of decentralized applications is really exciting.
Anything you can imagine that revolves around a trustless system that is decentralized, that allows
both the users as well as the creators to benefit, can be achieved.
So, for example, instead of having Uber drivers being ripped off by Uber, you could have user-and-
driver owned version of Uber, where everybody who is driving for the company or using the company to
get around is able to get access to the tokens to govern, to determine, how the company should be
run and also effectively own shares in that company
once it gets more and more successful. You can also realize crazy ideas like you could have racing
games on the internet and everybody puts in, you know, maybe a dollar in order to participate in the
game and then at the
end of the game, you have cash prizes going towards those who have won the game.
Now, another really massive benefit of Web3 is pseudonymity.
This idea that you can be identified by a handle or by a username, where you can have your privacy,
you don't have to reveal your real name or your address, or where you live, but you can create things
that benefit other people and be recognized and rewarded by your pseudonym.
And this is a great equalizer because it means it doesn't matter who you are, what race you are, what
gender you are, how old you are,
you're able to be recognized for what you do rather than who you are.
For example, I saw this article in Forbes where they interviewed three teenagers who created a decentralized
finance project called Rari Capital, which makes lending and borrowing on blockchain easier.
And they're only 18 or 19.
Imagine trying to get VC funding when you're only 18 and you haven't even gone to university.
And when these guys started out building on the blockchain, they were actually only 16.
And I remember how hard it was to be taken seriously when I was 15 or 16, whenever I had to call somebody
or when I had to show up somewhere
and they they sort of looked at you like, you are so young, like, what could you possibly know?
But instead, you know, with pseudonymity, you can build for the Web3, and it doesn't matter
if you're 12,
as long as you're able to produce valuable things, people will recognize and respect you and you can
raise funding and be judged only on your work.
So now I hope you're ready and pumped to start building DApps.
So where do we start?
Well, the first thing you'll encounter is you have to make a choice.
You have to pick a chain to build on.
Do you go for Avalanche or Polkadot or Solana?
How do you choose?
Well, currently the largest number of DApps are built on Ethereum
and this is just because it was the first one around.
It was the first chain which had these smart contracts, and you can write code that can be embedded
into the blockchain.
But Etherium has a number of fundamental problems that prevents it from being a good choice for creating
DApps for Web3.
And the biggest problem is scaling.
You can't store data on Ethereum, and it's very costly to perform computation on the Ethereum network.
So, for example, NFTs, which are minted on Ethereum, are not even stored on the blockchain.
Instead, what you get is a URL and the actual data, the actual image for the NFT is stored somewhere
else. That somewhere else could be using IPFS through Filecoin,
but often the images for an NFT are just stored on a company's private servers owned by, say, Amazon
AWS.
So the biggest problems with developing decentralized applications on Ethereum is the fact that it's
very costly to do computation on there.
It's very costly to store anything on there, and it's nearly impossible to actually have a proper back
end with a database, which is why a lot of decentralized applications running on Ethereum are actually
made up of a patchwork of different services.
For example, even the websites for loads of DApps with all their CSS, JavaScript, and images are usually
hosted on Amazon AWS.
So this is where the Internet Computer comes in.
Back in even 2014, where most of us were not really aware of the blockchain or how it works, or even
had the smarts to buy a bitcoin,
the team at Dfinity started building the Internet Computer and the idea is to build a scalable cloud
computer that runs on a blockchain.
So it has all of the benefits of a trustless decentralized system, but also it allows you to perform
fast computations, store data directly on the blockchain, and to be able to create fully-fledged applications
on chain.
So this is what we're going to be working with in this module to create decentralized applications.
And in the next lesson, I'm going to talk a bit more about how it works and how we can get started
building decentralized apps on it.