From Digital Collectibles to Collaborative Governance: NFTs, DAOs, and DApps Explored

Welcome to Web3.0

Welcome to my intriguing blog series on Web 3.0 Technologies! In this second article, we'll embark on a captivating exploration of NFTs, DAOs, and DApps. Say goodbye to surface-level knowledge obtained from brief internet searches, because we're diving deep into the essence of these technologies. Join me on this exciting adventure as we unravel the mysteries and gain a true understanding of NFTs, DAOs, and DApps. Get ready to expand your horizon of Knowledge!

Introduction To NFTs

Before directly jumping on to the technical and tedious definition let's understand it in a very cool and simple way.
Imagine you have a special toy, like a one of a kind Beyblade that nobody else has( I hope you got perfect nostalgia from your childhood ). Now imagine that the toy is called an NFT, which stands for Non-Fungible Token. It's like a super unique digital certificate that proves you own that special toy. It's different from regular toys because it can't be copied or replaced. But the only difference here is instead of you holding it in your hands, you keep them safe on the computer(online servers).

Just like you have your favorite toy, other artists and creators can also make special digital things like pictures, videos, or even music, and turn them into NFTs. This means they can show that they(the owner) made it and nobody else can claim that they made it. It's like having a special mark that says, 'I made this!'

Now let's explore NFTs in more technicality:
An NFT which is Non-Fungible Token, is a unique digital asset that is stored on a blockchain, which is a special type of computer network. Unlike regular digital files that can be copied and shared easily, NFTs have a special property that makes them one of a kind and distinguishable from each other.
The ownership of an NFT is recorded on the blockchain through a special type of code called a smart contract. Smart contracts are like digital agreements that automatically execute certain actions when specific conditions are met. They ensure that the ownership of an NFT can be easily transferred between people in a secure and transparent manner. { IF YOU ARE CONFUSED ABOUT THE TERM BLOCKCHAIN AND SMART CONTRACTS, THEN HAVE A LOOK AT PREV BLOG HERE }

Till now I hope you understood why NFT is called as Non-Fungible Token. In our day-to-day life, we mostly deal with Fungible items, like exchanging ETH or Rupee because (1 ETH / ₹1 RS) is exchangeable for another (1 ETH / ₹1 RS) because their value defines them rather than their unique properties.

NFT INTERNET vs THE INTERNET TODAY

NFT examples

Wondering in which format the NFT can be? The scope for NFTs is anything that is unique that needs provable ownership. Here are some examples of NFTs that exist today, to help you get the idea:

A unique digital artwork
An in-game item
An essay
A digital collectible
A domain name
A Tweet (Fun Fact: Jack Dorsey's First Tweet' NFT Went on Sale for $48M)

How Do NFTs Actually Work

As we know NFT can only have one owner at a time.
Ownership is managed through the unique ID and metadata that no other token can replicate. NFTs are minted through smart contracts that assign ownership and manage the transferability of the NFTs.

NFTs are minted on different blockchain platforms here in this blog we will consider Ethereum as a reference.

When someone creates or mints an NFT, they execute code stored in smart contracts that conform to different standards, such as ERC-721. This information is added to the blockchain where the NFT is being managed. The minting process, from a high level, has the following steps that it goes through:

Creating a new block
Validating information
Recording information into the blockchain

So if you create an NFT then:

You can easily prove you're the creator.
You determine the scarcity.
You can earn royalties every time it's sold.
You can sell it on any NFT market or peer-to-peer. You're not locked into any platform and you don't need anyone to intermediate.

NFT SCARCITY

The creator of an NFT gets to decide the scarcity of their asset.

For example, consider a ticket to a sporting event. Just as an organizer of an event can choose how many tickets to sell, the creator of an NFT can decide how many replicas exist. Sometimes these are exact replicas, such as 1000 General Admission tickets. Sometimes several are minted that are very similar, but each slightly different, such as a ticket with an assigned seat number. But sometimes totally opposite to this, the creator may want to create an NFT where only one is minted as a special rare collectible

NFT ROYALTIES

Some NFTs will automatically pay out royalties to their creators whenever they're sold to any number of people. For example, the original owners of EulerBeats Originals earn an 8% royalty every time their NFT is sold. And some platforms, like Foundation and Zora support royalties for their artists. This is completely automatic so creators can just sit back and earn royalties as their work is sold from person to person. At the moment, figuring out royalties is very manual and lacks accuracy – a lot of creators don't get paid what they deserve. If your NFT has a royalty programmed into it, you'll never miss out.

Now If you are done with reading this, you are next NFT Dope!!!

*****

DAO (Decentralized Autonomous Organization)

What Are DAOs And Why You Should Pay Attention?

Can you imagine a way of organizing with other people around the world, without knowing each other and establishing your own rules, and making your own decisions autonomously all encoded on a Blockchain? Well, DAOs are making this real.

DAO is an organization represented by rules encoded as a transparent computer program, controlled by the organization members, and not influenced by a central government. As the rules are embedded into the code, no managers are needed, thus removing any bureaucracy or hierarchy hurdles.

Example - Bitcoin is generally considered to be the first fully functional DAO, as it has programmed rules, functions autonomously, and is coordinated through a consensual protocol.

The Essence of DAOs

At its core, a DAO is a digital entity that operates autonomously, transparently, and without the need for a central authority. Unlike traditional hierarchical organizations, DAOs are governed by smart contracts, programmable pieces of code that execute predefined rules and enable automated decision-making. This decentralized Blockchain technology approach allows participants to engage in direct, peer-to-peer interactions, creating a more inclusive and democratic environment.

Operating Autonomously

DAOs embody the concept of autonomy, as they are designed to perform actions and execute decisions without human intervention. By relying on smart contracts, DAOs automate various processes, such as fund management, proposal voting, and resource allocation. This autonomous nature eliminates the need for intermediaries, reduces operational costs, and enhances efficiency, empowering communities to self-organize and collaborate seamlessly.

Transparency and Trust

One of the defining features of DAOs is transparency. All transactions, decisions, and changes made within a DAO are recorded on a public blockchain, visible to all participants. This transparency fosters trust among members, as it ensures accountability and discourages fraudulent or malicious activities. Participants can easily audit the actions of the DAO, promoting a culture of openness and honesty.

Potential Impact:

DAOs have the potential to revolutionize various industries, including finance, governance, art, and more. In finance, DAOs can enable decentralized investment funds, lending platforms, and insurance mechanisms, providing individuals with greater control over their financial assets. In governance, DAOs can foster transparent and inclusive decision-making processes, empowering communities to actively participate in policy formation. Furthermore, DAOs can disrupt the art world by enabling fractional ownership of digital assets and facilitating fair compensation for artists.

*****

DAPP (Decentralized Application)

Imagine a new way of building and deploying applications that breaks away from the traditional centralized model. That's where DAPP, or Decentralized Applications, comes into play. Instead of relying on a single central server, DPPs utilize the power of blockchain and decentralized technologies to operate on a peer-to-peer network. This means that data and logic are distributed across many computers, enhancing security and ensuring transparency.

With DAPPs, developers can create applications that enable direct interactions between users, without the need for intermediaries. This opens up exciting possibilities for creating more democratic and inclusive digital experiences. Users have more control over their data and can engage directly with each other, fostering a sense of empowerment and ownership.

One of the most used DAPP is: OpenSea

OpenSea is a peer-to-peer marketplace for NFTs, rare digital items, and crypto collectibles. Buy, sell, auction, and discover rare digital art, blockchain game items, and more.

BENEFITS OF DAPP

Zero downtime – Once the smart contract is deployed on the blockchain, the network as a whole will always be able to serve clients looking to interact with the contract. Malicious actors, therefore, cannot launch denial-of-service attacks targeted towards individual DAPPs.
Privacy – You don’t need to provide real-world identity to deploy or interact with a DAPP.
Resistance to censorship – No single entity on the network can block users from submitting transactions, deploying DAPPs, or reading data from the blockchain.
Complete data integrity – Data stored on the blockchain is immutable and indisputable, thanks to cryptographic primitives. Malicious actors cannot forge transactions or other data that has already been made public.
Trustless computation/verifiable behavior – Smart contracts can be analyzed and are guaranteed to execute in predictable ways, without the need to trust a central authority. This is not true in traditional models; for example, when we use online banking systems, we must trust that financial institutions will not misuse our financial data, tamper with records, or get hacked.

There are a few Drawbacks of DAPP which make it market resistance - 1) Maintenance 2) Performance overhead 3) Network congestion 4) User experience.

*****

"Let's stay in touch"

In the end, I would like to say that, Expanding your network can be incredibly valuable both personally and professionally. If you're interested in connecting, feel free to reach out and introduce yourself. I look forward to the possibility of building new connections and friends.

Last but not least, If you find my blog helpful you all can always support me by sponsoring me!
ThankYou!!!

#2Articles1week #Hashnode #web3 #NFTs #DAPP #DAO

From Digital Collectibles to Collaborative Governance: NFTs, DAOs, and DApps Explored

The New Era of Digital Assets: NFTs, DAOs, and DApps Redefining Value and Ownership

Table of contents

Welcome to Web3.0