Every dollar has the same value, no matter who owns it or when it was created. If I lend you a $10 bill, I don’t mind if you give me back a completely different $10 bill. Its value is no different to the original one. I can walk into any store and the owner will still accept it as ten dollars.
But if I lend you a non-fungible asset, like a baseball card, I expect the same one back. It’s one-of-a-kind.
A Working Currency Must Be Fungible
Generally speaking, this is how currencies function. The American monetary system would collapse if every dollar had a different value.
In a stable money system, the currency must be fungible. We can’t assess the unique value of each coin or note.
Bitcoin is a Fungible Asset
Like the dollar, bitcoin is also “fungible.” Every bitcoin is worth the same as any other bitcoin.
A bitcoin mined by Satoshi Nakamoto himself in 2009 is no more valuable than a bitcoin mined yesterday.
The history of a particular bitcoin doesn’t change its value either. A bitcoin used to buy drugs on the infamous Silk Road website has the same value as one in your wallet. A stolen MT. Gox bitcoin is worth the same as any other.
Ether, XRP and bitcoin cash are also fungible assets. Like any currency, a major cryptocurrency must be fungible or there would be chaos.
So where do non-fungible tokens come in?
Non-Fungible Tokens on the Blockchain
At first, blockchain was built to record currency transactions, like bitcoin. However, Blockchain is now evolving beyond money.
People are learning that blockchain can be used to track and record anything: real estate, artwork, and cartoon cats.
These assets don’t have the same (fungible) value. Each has a different price according to its unique attributes.
That’s why non-fungible tokens were created.
Let’s go back to cats. Every cryptokitty is really just a non-fungible token. They’re all tracked and recorded on the same blockchain, but now they can each have a different price.
Beyond Cats: How Will We Use Non-Fungible Tokens?
The next big use-case for non-fungible tokens is probably gaming.
Gaming already uses non-fungible items. Weapons, armor, potions and other items all have unique value in the gaming world. (Gamers often sell, trade or even bet these items over the internet).
We are slowly seeing this move onto the blockchain with tokens.
Worldwide Asset Exchange (WAX) is already working on this. Its decentralized exchange allows people to trade gaming “skins,” such as weapons or armor, using a non-fungible token.
Decentraland is another example where users can purchase virtual land using non-fungible tokens. Each piece of land has a different value based on its features.
Tokenizing the Real World
The future of non-fungible tokens, however, could go even further.
We could potentially use this technology to tokenize the real world. Your house could be recorded by a non-fungible token on a blockchain, for example. It has a different and unique value to the house next door.
You could also tokenize your car ownership, artwork, and event tickets.
This is often referred to as solving the “provenance” problem, by validating the origins of ownership.
Tokenizing Your ID and Personal Information
The same concept can be applied to people. We all have unique aspects that make us different.
Humans are non-fungible.
That means our passports could be issued as a non-fungible token. Perhaps driving licenses, social security numbers, birth certificates, or university diplomas, too.
Fractional Ownership of Non-Fungible Tokens
If non-fungible tokens are used for artwork or real estate, we can also introduce fractional ownership. In other words, each person can own a smaller piece of something bigger.
In June 2018, an Andy Warhol painting was sold using fractional ownership. 49% of the $5.6 million painting was put up for sale with people using cryptocurrency to purchase a small ownership in the painting.
Let’s say a piece of land is recorded using a non-fungible token. A group of five investors can each own a 20% share of the token (although the token itself cannot be divided like, say, a bitcoin).
The Technical Part – ERC-721 Tokens
Non-fungible tokens are most-commonly created on Ethereum. They are known as ERC-721 tokens. Cryptokitties, for example, uses the ERC-721 token standard to make it work.
ERC-721 tokens are similar to other cryptocurrency tokens. They can be traded on exchanges and held in a wallet. But they are designed to include unique features.
They are different to ERC-20 tokens which are the Ethereum standard for fungible currencies.
There are other ways to create a non-fungible token outside of Ethereum. 0xcert and Counterparty also allow developers to build non-fungible tokens.
Non-fungible tokens might have gained notoriety from a whimsical series of cartoon cats. But their potential is much larger. Non-fungible tokens may lead to the “tokenization of everything,” from real estate to art collections to our own ID.
In late 2017, cartoon cats appeared all over the blockchain.
Pretty soon, people were breeding these digital cats, swapping them like Pokemon cards, and selling them for over $100,000 dollars.
Cryptokitties became a sensation. It’s the simplest example of a dapp (and easily the most high-profile one out there).
Quick Dapp definition: Dapp is short for “decentralized application.” Think of a mobile app or website application, but hosted on a blockchain. In other words, it can’t be controlled by any one gatekeeper (such as Apple).
Dapps, like Cryptokitties, open up blockchain technology to a mainstream audience. If there’s ever a future where we’re using blockchain on a day-to-day basis, we’ll probably be using dapps.
In this article, we explore the difference between apps and dapps. We also look at ten of the most popular dapps out there.
App vs. Dapp: What’s the Difference?
Traditional Apps – When we think about traditional apps, a single entity typically controls the database and is responsible for determining whether or not that app can exist. For instance, the Apple App Store and Google Play have total control of hosting and maintaining applications.
These companies also charge developers high fees for hosting, and they earn large profits from sales. For example, Apple gets 30% of all revenue from app and in-app purchases.
Dapps – Perhaps the most fundamental difference is the way in which data is stored. While traditional apps use a centralized database, dapps run on blockchains, which are decentralized networks (i.e. no single entity owns or controls it).
From a user standpoint, dapp stores generally offer a much lower fee structure. They also offer more freedom in the sense that a single entity can’t serve as a gatekeeper. Truly decentralized blockchains don’t allow one party to censor users or dapps.
Thus, developers have the ability to more easily release dapps without having to worry about third-party interference or rely upon the approval of the blockchain creators. Some examples of popular dapp stores include Mobius, app.co, and iExec.
Most Popular Dapps in 2018
The following are some of the most popular dapps as of October 11, 2018. Stats were found on DappRadar. Rankings span across four categories (gaming, exchanges, gambling, and high-risk). Also, it’s important to note that rankings could change at any time in the future, especially as new dapps enter the market.
This is not a recommendation list! You might even want to avoid using some of the dapps mentioned here, especially those in the gambling and high-risk category.
When it comes to decentralized application games, CryptoKitties is the clear winner of this category ever since its launch in 2017. It’s a game that allows users to collect unique cartoon cats.
While there have been many popular collectible series in the past, CryptoKitties adds several unique elements thanks to blockchain technology. For instance, each CryptoKitty is represented in the form of a non-fungible ERC-721 token, which allows for each entity to have specific “cattributes”. This means each cat is truly one-of-a-kind. As a result, this has lead to the growing popularity of CryptoKitty auctions.
How popular is this dapp? In December 2017, CryptoKitties accounted for massive congestion on the blockchain. At one point, it cornered 25% of all Ethereum traffic, causing longer transaction times and higher fees.
This dapp is also becoming increasingly mainstream. For example, in March 2018, the company partnered with NBA star Stephen Curry to launch the first celebrity-branded CryptoKitty collectible series.
2. Gods Unchained
The level of support within the blockchain industry (not to mention the amount of venture capital) for this dapp is impressive. Gods Unchained features Coinbase, Nirvana Capital, Continue Capital, and several others in its partners and investors list.
According to the project website, this is the first ever blockchain eSport. Gods Unchained is a multiplayer game where users battle each other as well as trade, sell, and store gaming cards. Smart contracts guarantee the scarcity of everything in the game from creatures to spells to weapons.
According to the future roadmap, there will be a world championship for this game early in 2019. As of October 2018, around $350,000 has been raised to go towards the payouts for this event. The fundraising goal for the tournament is set at $1.6 million. In the future, users can also expect a release of Gods Unchained VR.
According to statistics, IDEX is the most popular Ethereum-based crypto exchange on the market today. While other exchanges like Coinbase/GDAX, Kraken, and Binance are centralized, IDEX is a decentralized exchange, commonly referred to as a DEX.
This means that users have full control over their own funds and own their own private keys. IDEX ranks high in terms of security and customer support. It also features lower fees than centralized exchanges. For example, market makers pay 0.1% fees, and market takers only pay 0.2%. However, fees can be higher at network traffic peak times.
DEX appears to have a massive lead over other exchanged like ForkDelta and Bancor when looking at seven-day trade volume.
ForkDelta only lists ERC-20 tokens (tokens used exclusively on the Ethereum network). Originally, this exchange was called EtherDelta. However, it failed to live up to user expectations and was sold in mid-2017.
Later on, it was rebranded as ForkDelta by a group of traders that launched the exchange. ForkDelta uses smart contracts to complete trades.
Similar to other decentralized exchanges, it offers relatively low fees (0.3% for order executions). While trades are not instantaneously carried out as seen in some centralized exchanges, ForkDelta does offer innovative integrations. For example, it’s possible to connect a Ledger Nano S wallet to the platform.
Compared to other decentralized exchanges on the market, it ranks high in terms of trade volume and liquidity.
The following gambling dapps are not a recommendation and anyone using them does so at their own risk.
Gambling-focused projects are quickly becoming one of the most well-established blockchain use cases. Fomo3D, the top gambling dapp in this space, ironically pokes fun at one of the main issues with blockchain: greedy ICO project teams. According to the dapp website, “it’s your exit scam”.
There are two games: Long Con and Quick Scam. They are built to simulate the standard hype, release, pump, and dump cycles of the countless ICO exit scams across the cryptocurrency space.
Much like a real Ponzi scheme, thousands of gamblers lost Ethereum funds (ETH) playing the game. However, in August 2018, one user actually won $3 million worth of ETH in the first-round jackpot.
Even with a high potential for losing funds and high blockchain congestion, multiple rounds of large jackpots make this dapp one of the most interesting, popular, and controversial gambling options on the market today.
Etheroll is a provably-fair casino game. Unlike traditional online or casino gambling, decentralized blockchain gambling is able to demonstrate the real chances of winning. This is good news for gamblers who might be concerned about falling victim to large house edges. No deposits or signups are required to play this virtual dice rolling game.
Users can not only choose how much ETH they want to bet but also pick their probability of winning. A lower probability of winning presents a higher payout potential. A higher probability of winning presents a lower payout potential. This game is quite simple to get started wagering bets.
Compared to Etheroll and Fomo3D, Zethr provides a larger selection of casino games. Users can purchase and use Zethr tokens to participate in a variety of gambling options on the platform. These include slots, dice, big wheel, and cards. Users can determine their own dividend rates.
Just like Etheroll, Zethr uses a provably fair algorithm for all games on its platform. This project also has a few different sites for game playing guides and platform usage stats. So for those users who might be unfamiliar with how Zethr games work, this information can help to understand more about this popular blockchain-based gambling site.
Technically, Augur is not a gambling dapp. On DappRadar, it is listed in the “other” category. So what is Augur exactly? This dapp serves as a prediction market. In essence, users can bet on the outcomes of future events using ETH or REP (Augur’s native cryptocurrency).
For example, users can bet with each other on which candidate will win an election or even catastrophic events. Unlike gambling dapps where outcomes are part of computer code, Augur makes it possible for users to create their own markets. Augur also utilizes a permissionless protocol and offers automated payouts once an outcome is declared.
Eventually, Augur aims to become more than just a betting system. It is pitching itself as a business and political forecasting tool.
High-Risk Dapps (Proceed With Caution)
9. 333 ETH
333 ETH is listed under the high-risk category on DappRadar. Why is this the case?
The reality is that this dapp does sound like a scam. Even despite this, it has become one of the top decentralized applications on the market. According to the project website, one only has to have contributed 0.001 ETH per day and will earn 3.33% daily interest (paid in ETH).
As you might have heard, there are scams (especially on Twitter) where people impersonate famous crypto influencers or project teams. They ask other users to send smaller amounts of crypto in order to get a larger sum in return.
This is not a recommendation and anyone using 333 ETH does so at their own risk.
10. Crypto Miner Token
The concept behind Crypto Miner Token (CMT) is similar to that of 333 ETH. According to the project website, CMT is used to help miners earn larger profits. In summary, miners that earn 1 ETH, for example, typically let this amount sit idle in their wallets.
By converting it to CMT, miners are (at least according to the website) able to earn more value. The website also mentions 10% transformation and 4% withdraw fees for CMT participants. These are high amounts by any standard and part of what makes this dapp appear fishy.
This is not a recommendation and anyone using Crypto Miner Token does so at their own risk.
Which Blockchain Will Be the Go-to Platform for Dapp Developers?
The ten dapps mentioned above all utilize the Ethereum blockchain. This is likely because Ethereum is the most well-established dapp platform and largest by trade volume on the market today. This momentum means developers continue to utilize this platform.
However, Ethereum faces competition for the most dominant platform for dapps. EOS, NEO, and others are all building similar dapp ecosystems for developers and users alike.
Which will become the most popular? A number of factors like throughput, scalability, and security will determine which platforms are technically prepared for mainstream user adoption in the future.
There are also dapps for a variety of blockchain use cases beyond just those mentioned above. It will be interesting to see how this market changes in the coming years, especially with emerging improvements in blockchain technology.
In conclusion, dapps make it possible for blockchain use cases to move from mere ideas to real-world solutions. We are only now beginning to see the rise of decentralized applications and their potential to positively impact specific industries and drive web 3.0 and blockchain forward.