Bybit Cloud Wallet offers a seamless way to manage cryptocurrencies without having to handle private keys. Learn more about how it works in this article.

Bybit Cloud Wallet makes crypto management seamless for everyone by offering a user-friendly platform for storing and managing cryptocurrencies without the hassle of handling 

 not only enhances security but also simplifies interactions with Bybit Web3 services. In this article, we'll explore how Bybit Cloud Wallet works and its benefits and risks, and provide a step-by-step guide to using the wallet. 

Bybit Cloud Wallet is a custodial digital wallet integrated with the Bybit platform, allowing users to store and manage cryptocurrencies without handling private keys directly. It offers enhanced security and accessibility for web3 interactions.

Bybit Cloud Wallet is a custodial wallet, meaning that Bybit manages the private keys on behalf of its users. This design simplifies the experience by removing the burden of securely storing seed phrases or private keys. It integrates with Bybit accounts to streamline cryptocurrency management and provide secure handling for private keys.

Users can access their wallet by logging into their account and completing the Cloud Wallet setup. A unique wallet address is generated, and the associated private keys are securely stored on Bybit's cloud servers. Once the wallet is configured, users can safely store, manage and transact a variety of digital assets. 

When initiating transactions — such as sending or receiving cryptocurrency — a request is created and securely transmitted to Bybit’s servers. The provider verifies the request using the stored private keys, ensuring it’s been authorized by the rightful owner.

Depositing funds into the Bybit Cloud Wallet is straightforward, and users can transfer cryptocurrencies from other wallets within the Bybit Web3 platform with ease. Withdrawals follow a similarly simple process, whereby users specify the amount and destination address while selecting their preferred gas fees.

The wallet uses standard security protocols to protect user accounts and funds from unauthorized access. While the custodial nature of the wallet makes it user-friendly, it also necessitates trust in Bybit's security practices.

Bybit Cloud Wallet integrates with various Bybit Web3 services, enabling users to trade, 

 (DApps) directly through the wallet’s interface.

Bybit Cloud Wallet offers a range of benefits for users seeking an efficient and secure way to manage their cryptocurrency assets.

While Bybit Cloud Wallet offers numerous advantages, users should also be aware of several inherent risks associated with its use.

: Navigate to the Bybit homepage and log in to your Bybit account. Then, click on the 

tab on the top left corner of the page. 

. This will generate a unique wallet address associated with your account.

Now that you’ve created your Bybit Cloud Wallet, here’s how you can deposit tokens and start interacting with DApps. There are two ways in which you can deposit tokens into your Bybit Cloud Wallet — by transferring from your Bybit Funding Account, and by transferring from your external wallet.

: Please ensure that you already have funds in your Bybit Funding Account before you proceed with the steps below. 

: Hover your cursor over your profile icon in the upper right corner of the Bybit homepage, and click on 

 (Web3) and your Bybit Wallet (Web3) address will automatically be filled. Select your preferred 

and enter the amount you wish to withdraw to your Bybit Wallet (Web3).

: After you’ve checked and verified all details, click on 

Congratulations! You’ve successfully transferred assets from your Bybit account to your Bybit Cloud Wallet!

Let’s use MetaMask and the BNB chain as an example. 

: Navigate to your MetaMask wallet. Then, click on the 

. Click on the copy icon to copy your Bybit Wallet address.

and paste your Bybit Cloud Wallet address into the input box. 

: Please make sure you choose BSC. Otherwise, your USDT and BNB may not be transferred successfully.

Congratulations! You’ve successfully transferred assets from your external wallet to your Bybit Cloud Wallet.

 next to the token you would like to withdraw, and transfer your funds to your Bybit Funding Account.

, enter the amount you would like to withdraw, choose your gas fees and click on 

: Confirm the details, request the verification code and submit your withdrawal request.

 next to the token you would like to withdraw, and transfer your funds to your external wallet.

: Enter the receiving wallet address and the amount, and choose your gas fees. Click on 

: Review the details, submit the verification code and confirm your withdrawal.

: To view your transfer history, hover your cursor over the 

tab in the top-right corner of the Bybit Web3 page, and click on 

: You can check your deposit and withdrawal history under either the 

Who Is Best Suited to Use the Bybit Cloud Wallet?

Bybit Cloud Wallet combines ease of use with robust security measures, making it a suitable option for users who prefer not to manage their own private keys, while still being able to conduct cryptocurrency transactions.

Individuals who are new to cryptocurrencies will find Bybit Cloud Wallet appealing due to its user-friendly interface and custodial nature, which eliminates the need for managing private keys. This accessibility allows users to engage with digital assets without needing extensive technical knowledge.

 services will also appreciate the wallet's integration with various DApps and platforms, allowing for easy interaction within the blockchain ecosystem.

Deciding whether to use the Bybit Cloud Wallet depends upon your specific needs and preferences. If you value security, convenience and the ability to manage multiple cryptocurrencies within a single platform, Bybit Cloud Wallet is a strong choice. However, if you prefer having full control over your private keys and assets, a 

 might be a better option. Consider your priorities and the level of control you desire over your digital assets when making your decision.

Bybit Cloud Wallet offers a secure and convenient way to manage cryptocurrency assets without the complexity of handling private keys. Its seamless integration with Bybit Web3 services makes it ideal for beginners and experienced users alike, enabling easy interactions with DApps and DeFi platforms. While Bybit Cloud Wallet offers strong security and user-friendliness, the risks of using a custodial wallet remain a consideration for those seeking full control over their assets.

Beginner

bybit cloud wallet.png

Bybit Cloud Wallet: Seamless Crypto Management for Everyone

USUAL introduces USD0, a stablecoin backed by U.S. Treasury Bills, offering transparency, security, and revenue sharing through its governance token, USUAL.

More than a decade ago, in mid-2014, the first 

 arrived on the stage of the crypto market. These cryptocurrencies were designed to provide stability in the typically volatile world of crypto, and to serve as a bridge between the traditional finance (TradFi) and 

 (DeFi) ecosystems. At the core of their functionality is a mechanism that maintains a close peg to some traditionally valued asset, be it the U.S. dollar, euro or 

Stablecoins have proved to be tremendously popular, with the leading asset in this niche, 

 (USDT), routinely attracting higher trading volumes than any other cryptocurrency — including the mighty Bitcoin. The second most popular stablecoin in the market, 

 (USDC), also enjoys multibillion-dollar daily trading volumes, and ranks among the top 10 cryptocurrencies by market cap.

Despite their popularity, many leading stablecoins — including the dominant USDT and USDC pair — have opaque collateral management mechanisms, are lacking in transparency, don't distribute revenues to the wider user community and are highly centralized in terms of control.

Usual (USUAL) is a DeFi solution launched on the 

 (ETH) blockchain that aims to tackle these deficiencies of traditional stablecoins by offering a 

 (RWA)–backed stablecoin and redistributing protocol revenues among its users. The platform's primary stablecoin — USD0 — is backed by collateral invested mainly in short-term U.S. Treasury Bills; maintains a tight peg to the greenback via these secure investments; has a fully transparent reserve verification system; and opens up additional yield opportunities across a variety of external DeFi protocols via a 

 (USUAL) is an Ethereum-based DeFi platform that offers an RWA-backed, USD-pegged transparent stablecoin, USD0, and distributes protocol revenues among its user community. 

USD0 is backed by collateral invested in RWAs, primarily in short-term U.S. Treasury Bills. The short-term, highly liquid and secure nature of these government-issued assets ensures that USD0's peg to the U.S. dollar isn't likely to be compromised.

Usual has partnered with Hashnote, a Florida-based regulated provider of digital and tokenized fund products, to facilitate secure investment in U.S. Treasury Bills and associated products.

Usual's USD0 is a unique stablecoin product, distinct from the dominant assets in this niche, 

 and USDC. While these cryptocurrencies also maintain fiat reserves to back their value, they’re controlled by centralized corporate entities, and their USD reserves are exposed to the traditional banking system, with poorly known levels of risk associated with them.

, whose values aren’t backed by fiat assets, and which are highly dependent upon underlying protocols’ activity to maintain their pegs. In many cases, these algorithmic coins lose their pegs and stability when the underlying lending or borrowing activities on their protocols are manipulated by 

 or become subject to panic-driven runs. The most notorious example was the 2022 

Usual’s platform also offers a liquid staking version of USD0, USD0++, which can be used throughout the DeFi ecosystem for additional yields. It has partnered with several Ethereum DeFi protocols to expand the universe of platforms where USD0++ can be utilized, including 

Usual also has another distinct feature: the protocol aims to distribute future revenue among its users, specifically among holders of its upcoming USUAL 

The platform was developed by the France-based Usual Labs, a blockchain development outfit co-founded by Adli Takkal Bataille, Hugo Sallé de Chou and former French parliament member Pierre Person. Usual launched the USD0 stablecoin in mid-2024. In late November 2024, the platform introduced the USUAL governance token, set to be launched sometime in mid-December 2024.

The introduction of the USD0 stablecoin is a potentially paradigm-changing event for the crypto market. This innovative asset adopts many of the advantages of fiat-backed stablecoins, but also resolves many associated issues. Usual Labs has targeted several goals with the advent of USD0 and its unique working mechanism.

One key aim is to change the way that profits from decentralized stablecoin operations are shared. Usual's revenue is to be shared with the user community — namely, the holders of the USUAL token. All the revenue generated from the platform's operations flows to its treasury. USUAL holders are in charge of this revenue, making them eligible to decide on the actual distribution. In essence, owning USUAL entitles you to a share of potentially 100% of revenue generated by the platform.

This starkly contrasts with the way that other fiat-backed stablecoins, notably USDT and USDC, operate. All the revenues generated from these stablecoins are appropriated by their respective founding companies — Tether Limited for USDT, and Circle Internet Financial Limited for USDC. While the risks from the operations of these assets are externalized and shared with holders of the stablecoins, the revenues are internalized and scooped up by Tether and Circle.

Another aim of the Usual project is to bring transparency to the management of collateral that backs the USD0 stablecoin. As a decentralized protocol, Usual provides the transparency of collateral funds' allocation. Again, this contrasts with the opaque nature of the way that USD collateral for some stablecoins is managed. Tether's USDT has particularly 

 in the crypto investor community, as the company has never conducted a full-scale audit for its vast claimed dollar reserves.

Another aim of Usual is to provide a stablecoin that’s completely secure from exposure to the traditional, fractional reserve-based banking system. Some crypto investors have derided the fractional reserve system, whereby only a small proportion of client liabilities are actually held at any given time by banks. Projects like USDT and USDC rely heavily on the traditional banking system, which backs their U.S. dollar reserves. These banks naturally rely on fractional reserves that, at least in the opinion of the most risk-averse investors, exposes them to 

In contrast, USD0 is backed by short-term U.S. Treasury Bills, an asset class that’s fully backed by the U.S. government's pledge. These are considered among the safest assets in the world of finance, as the U.S. government has never yet defaulted on its payment obligations. Unlike USD deposits in banks, USD0's Treasury Bill–based collateral isn't exposed to the risks of the fractional reserve system. As such, the coin's collateral is based on a government-backed asset, providing a level of security that most fiat-based stablecoins in the market are unlikely to match.

Usual uses a three-token model to power its operations and services. There's the fiat-backed USD0 stablecoin, which is protected by Treasury Bill collateral. The second asset is the USD0++ LST, a derivative of USD0 issued upon staking the latter. And there’s the USUAL governance token that grants holders the right to participate in decision-making on the protocol's rules and future direction.

The Usual protocol provides two ways to mint the USD0 stablecoin:

:This is normally done by investing in the USYC fund and using it as collateral, then depositing it into the mint engine to mint USD0. USYC is an on-chain representation of the Short Duration Yield Fund (SDYF) provided by Hashnote, a regulated provider of tokenized fund products. USYC/SDYF is based mainly on U.S. Treasury Bills with short-term maturity.

:You can also mint USD0 indirectly on a 1:1 basis by supplying the USDC stablecoin as collateral.

Redeeming the stablecoin is also possible in two ways — directly through the protocol, or via the secondary market. When using direct redeeming, you simply withdraw your RWA collateral using the protocol's interface. Alternatively, you can sell USD0 for USDC or USDT via a secondary market platform, such as 

 (CRV), a popular DeFi protocol that specializes in stablecoin assets.

USD0++ is an LST representation of USD0. When you stake USD0 on the platform, you’re issued USD0++, which is fully composable and can be used on various Ethereum-linked protocols to earn additional yield. You can lock USD0 to get issued USD0++ for four years. However, you’re also free to unstake at any time.

Staking rewards from locking USD0 to get USD0++ are paid in USUAL tokens. Usual's model rewards long-term staking commitments, as users are encouraged to stake for at least six months — this is the minimum period of staking required to qualify for what the protocol calls the 

 (BIG). BIG essentially refers to a guaranteed yield from native staking of the underlying RWAs on the Usual protocol. When the period concludes, the staker can choose to collect the yield in either USUAL or USD0.

Yields start accumulating from day one of staking. Although users are free to unstake at any time, those who do so before the six-month minimum period will forfeit accumulated rewards.

USUAL is the Usual protocol's governance crypto token. It was unveiled on Nov 19, 2024, and is currently in pre-market mode only. It's expected that USUAL's public launch will occur in the near future. As USUAL is a community-first token, 90% of the tokens are distributed to the community with only 10% allocated to insiders (team and investors).

Usual feeds its revenues into its protocol's treasury, which is controlled by the USUAL holder community. As such, USUAL holders own 100% of the platform, a significant departure from the system used by many other stablecoin issuers, whereby a corporate entity earns all or the majority of the profits. 

Additionally, Usual is designed such that its protocol will incentivize early adopters and long-term holders. As the TVL of USD0 increases, Usual will generate more revenue. The emission rate of USUAL is also disinflationary, gradually reducing as the TVL of USD0 rises and enhancing the scarcity of the token, which will subsequently lead to a boost in its value.

At the initial stages of the platform's market presence, Usual Labs is largely responsible for governance decision-making. However, this function will be taken over by USUAL holders, likely in the form of a 

Although called a governance token, USUAL has additional functionalities beyond supporting the protocol's governance processes. It’s also used to distribute yields from staking ( as discussed in the section above on USD0++). Rewards from the protocol's loyalty point campaigns are also airdropped in USUAL. 

In addition, USUAL can be staked for additional governance rights and rewards. USUAL stakers will receive 

, from which they can earn a portion of USUAL emissions and 50% of the fees generated from people unstaking their Usual assets (USUAL or USD0++).

USUAL's maximum and total token supply are specified at 4 billion. The initial circulating supply during the early days of the token's pre-market trading is close to 500 million as of Dec 2, 2024.

The Usual protocol ran a points-based reward program from July through the last week of November 2024. Called the 

, it let early users accumulate points by acting as liquidity providers before the protocol's full public launch phase. The accumulated Pills points will determine users' eligibility for a USUAL airdrop, slated for mid-December.

The airdrop will allocate 8.5% of the token's supply to eligible users — the more Pills points you've earned, the more USUAL tokens you’ll receive.

During the token's pre-market trading stage, Bybit is one of the rare platforms that’s allowing you to access it. As of Dec 2, 2024, 

 on Bybit's Pre-Market Perpetuals Trading platform as a 

 lets you invest in a variety of upcoming cryptocurrencies via USDT-based perpetual futures contracts before these assets are listed on the main spot or derivatives markets. Using this platform, you can access a range of promising new crypto assets before they become publicly available. There are two main limits enforced by Perpetual Pre-Market — the position size cannot exceed $250,000, and leverage is permitted up to 5x.

Stablecoins are one of the oldest asset types in the crypto industry, while RWAs are a much newer trend that’s growing increasingly popular among investors. The Usual project has decided to marry these two areas, providing an RWA-backed, USD-pegged stablecoin — USD0. The concept of using an RWA for stablecoin collateral may not be totally unique. However, using a highly secure asset such as U.S. Treasury Bills with short-term maturity is something that truly distinguishes the Usual protocol.

Distributing revenue among the governance token holder community is also a refreshing innovation in a niche dominated by providers who largely internalize protocol incomes. Currently, the stablecoin market is heavily dominated by USDT and USDC, with 

 (FDUSD) also recently posting impressive, multibillion-dollar daily trading volumes. All three of these stablecoin issuers lack a mechanism to share revenue with their users. A major stablecoin provider that utilizes a democratized way of sharing protocol revenues with the user community is a deserted area, one that the Usual platform is keen to claim.

With all these merits of the Usual protocol, the upcoming USUAL token is a promising and potentially rewarding asset. Investors interested in stablecoins grounded in highly secure TradFi collateral might want to take a closer look at these new arrivals on the block — the USD0 stablecoin and the USUAL governance token.

Intermediate

usual crypto.png

Usual (USUAL): A New Model of Collateralized Stablecoin Ownership

AI agents in crypto are autonomous entities designed to operate within blockchain ecosystems. A popular AI agent is AIXBT, which specializes in providing crypto market intelligence.

The cryptocurrency ecosystem runs on narratives, and the current cycle is being driven by two major ones: meme coins and artificial intelligence (AI). 

The recent AI agent craze has captured both of these narratives to a large extent. November 2024 saw several AI agents gain significant traction, boasting tokens with market caps in hundreds of millions of dollars. 

As of now, most of these agents are used as key opinion leader (KOL) influencers to post on X (formerly Twitter), interact with X users and promote their particular tokens. However, they have the potential to evolve to handle complex tasks and reshape how users interact with 

AI agents are autonomous entities designed to operate within 

 ecosystems. They can utilize machine learning algorithms and data analytics to perform a variety of tasks, such as trading, posting tweets, building a community and even creating art or music. 

At first glance, an AI agent might just look like a fancy rebranding of traditional bots that have existed in the ecosystem for a long time. But unlike traditional bots that follow rigid rules, AI agents can analyze data in real time and adapt their strategies accordingly. This flexibility and learning capability make them significantly more sophisticated than conventional bots. 

AI agents have a variety of applications within the cryptocurrency space:

, an AI agent deployment platform that operates on the 

 blockchain. It enables any user to create and launch an AI-powered agent that can perform a variety of tasks and accrue value for its token holders. 

The recent popularity in the AI narrative has driven the price of Virtuals Protocol’s token, VIRTUAL, from $0.05 to $1.89 in just a few months. 

Virtuals Protocol operates similarly to the popular Solana-based meme coin launchpad 

. By purchasing VIRTUAL tokens, any user can build an AI agent to seamlessly interact with different networks. Each agent requires 10 VIRTUAL tokens for deployment. Once deployed, the agent token enters a bonding curve, whereby users can buy or sell it depending upon their interest.

If the bonding curve market cap reaches $420,000, the token’s liquidity pool is deployed on 

 and the agent is transferred to a new contract that handles the on-chain creation process. The agent also becomes visible on the platform, where users can trade it freely. 

There have been several notable launches from Virtuals Protocol, none more so than 

, which has reached a market cap of approximately $200 million in less than a month. AIXBT specializes in providing crypto market intelligence and automates the process of tracking market trends and interpreting data. It tracks over 400 KOLs to understand trending narratives in real time, and can perform technical analysis on the price movements of different cryptocurrencies. 

AIXBT has had a remarkable run-up in price during November 2024, as its market cap has increased from around $42 million to over $230 million. Its price has since retraced slightly, with its current market cap hovering around $174 million. The number of token holders has also seen a sharp increase over the past month. 

While AI agents present numerous advantages, they also bring some challenges. The biggest concern with any AI agent is 

, as their responses aren’t always accurate. Therefore, solely relying on them for research can be counter-productive. The second major concern is security: adding an AI agent to execute a transaction also adds an additional layer of security risk and vulnerability that could be exploited by malicious actors. 

Conclusion: The Future of AIXBT and AI Agents

Despite the risks outlined above, AI agents such as AIXBT have become the hottest sector of the current crypto cycle. The 2017 cycle was led by the advent of 

 platforms, and the 2021 cycle was largely driven by DeFi. Now, as we head into 2025, we could possibly see AI agents becoming the breakthrough technology that provides a new case for cryptocurrency.

aixbt.png

AIXBT by Virtuals: The AI Analyst Shaking up Crypto Twitter

Sonic Labs is set to publicly launch its new layer-1 blockchain, Sonic, after achieving its Genesis block.

Daily Top Performer — Hedera Hashgraph (HBAR)

The S&P 500 rose 0.24% to a record high, led by tech stocks, as investors eye labor data and Fed speeches. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.78%, with Bitcoin and Ether dropping by 1.51% and 2.48%, respectively in the past 24 hours.

Today's top performer is HBAR, which surged 59.0% following the announcement of Hedera and SEALSQ's collaboration to revolutionize decentralized physical infrastructure.

Hedera Hashgraph (HBAR), launched on September 2019, is a cryptocurrency network that supports fast transactions and application deployment, overseen by a select group of business-approved nodes. This design ensures quick finality and reliability, attracting major corporations like LG, IBM, and Boeing as participants. SEALSQ and the Hedera Hashgraph Association are collaborating to develop 

 using Hedera's DLT. The partnership integrates SEALSQ's platform to securely manage trillions of object transactions, aiming to revolutionize physical infrastructure with scalable, decentralized solutions.

Check Out the Latest Prices, Charts, and Data of 

, Sonic, after achieving its Genesis block. Positioned as a faster, EVM-compatible successor to the Fantom Opera network, Sonic aims to reduce latency and transaction fees while incentivizing developers with 90% of generated fees. Supported by the Fantom Foundation, Sonic allows users to swap FTM tokens for S tokens at a 1:1 ratio, with 200 million S tokens being airdropped. Sonic achieved 720-millisecond transaction finality during testing, positioning it as a competitor to fast EVM chains like Solana.

Yesterday, the BTC Spot ETF data shows a total flow of $15.3 million, with $28.1 million flowing out of GBTC and $43.4 million in non-GBTC products.

, offering free points (shards) to participants. To earn 3000 shards, users need to sign up, verify their email, and connect their X and Discord accounts. Additional points can be earned by creating content about Talus on X. Talus is a high-throughput layer 1 blockchain designed for decentralized AI agents, and its token is confirmed.

2.png

Sonic Labs Prepares for Launch as the Fastest Fantom Successor Blockchain

Bybit Learn

Blockchain

web3

Decentralized apps (DApps) are open-source software apps designed to run on P2P blockchain networks. Find out more about how they work and why they exist.

Technology has spoken: The world no longer needs middlemen. 

Thanks to decentralized apps, or DApps, you no longer have to go through a company or single authority to connect to people or the goods and services you need. Unlike conventional apps, DApps aren’t owned by a single entity, they never have downtime, and they cannot be shut off. This novel breed of application is quickly changing the app game and the world. 

Below, you’ll learn all about DApps, how they work, why you should use them, and some of the challenges this new type of app faces both now and in the days ahead.

 and DApps becoming more and more popular, chances are that you’re wondering — like millions of others — what DApps are and what this new technology is all about. Essentially, DApps are applications just like any other, but instead of running on a single server, they run on decentralized P2P networks. This means there is no single central authority.

 and decentralized networks supported by distributed 

 ledgers, DApps can be continually improved and built upon by others once the codebase has been released. This makes their control by a single authority virtually impossible.

, and other distributed ledger technologies have helped popularize DApps. The use of blockchain allows DApps to process data and execute transactions through 

DApps have been created for a variety of applications, ranging from gaming and social media to web browsing and DeFi. Unlike web-based apps, DApps are always accessible and are not exposed to any single point of failure.

DApps are still in their nascent stage, so the specific definition of a DApp or the criteria needed to be considered a DApp isn’t something that can be explained in a single line. Nonetheless, in 2014, a 

 was released defining DApps. In it, DApps were defined as entities meeting the following four criteria:

The first and most crucial criterion for a DApp is that its core source code must be available to everyone. It must be user-controlled and work without any third-party intervention, and no entity can own more than 50 percent of the tokens or coins issued. While it was created several years prior to Ethereum, which is the blockchain network most DApps are built on, Bitcoin is an excellent example of a DApp, as its code is open-source, it has no majority owner, and it’s governed by a proof of work consensus mechanism.

As their name suggests, DApps use decentralized blockchains. In fact, to be considered a DApp, all information must be stored in an openly accessible blockchain to keep the app free of centralized authority and invulnerable to any central point of attack.

Since DApps are based on decentralized blockchain networks, everyone who validates their records must be incentivized or rewarded with digital assets, such as cryptographic tokens. These tokens serve as payment to miners and stakers, who are necessary for the DApp’s continued operation and growth.

A DApp must run according to a protocol, and the development community must agree on a 

 (PoW) cryptographic algorithm as a means of showing proof of value.

Under this definition and according to these criteria, many cryptocurrencies, like Bitcoin, can be considered DApps, even if in a rudimentary sense. In fact, even without the use of smart contracts, a blockchain in and of itself can be considered a DApp.

Like Bitcoin, blockchains can host DApps with their own blockchains. Or, like Ethereum-based blockchains, non-blockchain based DApps can be built on top of existing blockchains. If all of this starts to sound a bit confusing, just remember DApps and blockchains go hand-in-hand.

DApps may be getting a lot of shine these days, but they’re nothing new. In fact, for all of you younger millennials out there, you may be surprised to know that they even predate Bitcoin. That’s right; DApps have been around since the thought of blockchain technology was, well, just a thought.

If you were born post-1995, you may not have heard of some of the earliest decentralized applications. The most famous were 

 (which was influential in the naming of Bitcoin), 

. However, back then, the term “DApp” didn’t exist. If it did, no one knew it, and it certainly wasn’t a part of everyday nomenclature like it is today.

It wasn’t until P2P file sharing, which preceded blockchain, that DApp usage really started taking off. Websites leveraging BitTorrent protocol, for example, are still widely used around the world today, despite always seeming to be in regulatory hot water.

Today, however, DApps are mostly talked about in relation to blockchain, as many decentralized software startups utilize the technology’s native properties as foundations for their apps. By leveraging existing networks, there’s less need for development costs. Bitcoin and similar systems also allow for the distribution and tracking of native tokens given out to backers during project launches.

That said, as mentioned, decentralized applications have continued to evolve with blockchain technology, and most modern DApps are built on Ethereum, which many consider a second-generation blockchain. In addition to basic proof-of-work protocols for ledger management, these second-generation blockchains are layered with smart contract functionality to create a developer-friendly framework and ecosystem.

While Bitcoin was the world’s first blockchain, the once revolutionary technology has quickly evolved far past processing simple financial transactions. When Ethereum was proposed by Vitalik Buterin in 2013, his sights were set on something much bigger —a  decentralized world.

Buterin envisioned an internet based on blockchain, one where corporations didn’t have control, users did. To do so, Ethereum developed the now widely used smart contract. Essentially little more than automated if-then statements, these contracts are immutable and have rules and limitations built right into their code. This allows any party to transact without the need for an intermediary or centralized platform. This type of DApp is the one we know today.

A DApp is executed and stored on a blockchain network, commonly using Ethereum but now utilizing various tokens native to other networks as well. Cryptographic tokens are used to validate the app and are required to access the application.

In many ways, DApps are quite similar to conventional apps, as they both render web pages using the same front-end code. If you’re still wondering what DApps are, it’s the back-end code that makes them different, since they run on decentralized P2P networks.

While traditional applications are supported by centralized servers, DApps are supported by smart contracts stored on a blockchain. When it comes to using smart contract technology, the most popular blockchain to date is Ethereum, though competitors are numerous and proliferating.

A smart contract mediates transactions and enforces rules written into the code. While important, they only exist on the back end and make up just part of the complete DApp. Creating a DApp based on the use of a smart contract system requires combining a number of smart contracts for the back end. For the front end, third-party systems are used.

Smart contracts run on a ledger of data stored in blocks. Rather than being stored on a server in a central location, the blocks are dispersed across distributed locations. Each of the data blocks are linked and governed by cryptographic validation.

Using this decentralized blockchain as well as smart contract technology, DApps can be created and used for almost anything, including:

DApps run on distributed systems and aren’t owned by a company or individual, giving them their own unique advantages. Of course, because technology is always changing, DApps are works in progress. Let’s go over their pros and cons.

As you now know, DApps don’t rely on a central server. Because of this, they’re often regarded as being more secure than traditional centralized applications. Given the rampant

 taking place these days, anything you can do to secure your data should definitely be a priority.

Since DApps are hosted across expansive decentralized networks, there’s virtually no need to worry about data loss. If one of the blockchain’s nodes goes down, all of the other nodes pick up the slack to ensure your data remains in sync — and that you don’t miss a beat.

Each node of a blockchain syncs with the others to accurately track every action taking place within the network. This is how new transactions are verified. Would-be attackers must control a majority of the network’s computers for a successful intrusion, but even then, they must bypass cryptographic encryption.

While this alone isn’t impossible, it’s extremely difficult within a distributed, decentralized system. That being said, there’s no absolute guarantee of data safety these days, regardless of which type of app you’re using.

Not only must conventional, centralized apps act according to their country’s laws and regulations, but they must also follow the Terms & Conditions they themselves arbitrarily set when deciding which content they should and shouldn’t publish.

DApps, on the other hand, have no central authority telling community developers and users what they can and cannot say, which transactions they can or cannot make, or even what blockchain data they can read.

Centralized apps often have higher costs. For instance, applications like YouTube profit by taking a percentage of what their users earn from their video postings. Apps that are decentralized allow users to transact directly through the use of cryptocurrency. They are thus more financially efficient, and have no middlemen to cut into profits.

With greater flexibility and more robust than centralized apps, due to their lack of connectivity to a single central server, DApps can run with minimal downtime and fewer interruptions for maximum resilience and continuity.

Executing global transactions takes place very quickly, as no third parties exist to approve each one. Since transaction approval is based on consensus algorithms within the network, expensive third parties can be eliminated and transactions can be executed much faster.

Having no central authority also means slower updates. Even fixing a minor bug requires majority consensus among every peer in the network. With this governance structure, it can take weeks and sometimes months before a problem can be fixed and an update made.

DApps also require a sizable user base in order to operate properly. The more users an app has, the more effective it will be in delivering its services. This is known as the 

. Many newer DApps suffer from low user numbers, making them less interactive and diminishing the overall user experience.

Since DApp users aren’t required to provide their real identities when interacting with the apps, verifying the identities of customers can be challenging.

For starters, while these apps do away with the possibility of data breaches on centralized servers and data systems, their open-source nature does leave them vulnerable to hacks and scams. Since they’re open-source, hackers have opportunities to probe blockchains and their networks in search of weaknesses. The 

 alone cost the ecosystem $80 million in 2021.

Fortunately, as decentralized app technology continues to expand and user bases grow, the industry is taking action to make hacking blockchain networks increasingly difficult. Some of the strategies currently being worked on include smart contract debugging, eliminating copy-and-paste errors, fixing faulty app logic and implementing regular audits.

While DApp creators are taking steps to fix these issues, as more and more DeFi projects hastily launch without proper funding and auditing protocols, the hacking problem persists.

The majority of apps today operate on centralized networks owned and maintained by a controlling authority. Streaming services, social media networks and financial institutions all hold your data on servers. When accessing these apps, their servers receive a request and they send the result back to you after validating your credentials. This generates enormous amounts of user data, which results in exposure to hacks, as well as big tech companies profiting from it.

These shortcomings have led to greater data security awareness and increased interest in blockchain technology. Decentralized by nature, blockchains eliminate the need for third-party intermediaries. Thanks to automated smart contract usage and shared consensus, Ethereum-based blockchains and apps can be completely decentralized, and function without Big Tech getting in the way.

What Are Decentralized Apps (DApps) & Why Are They Used?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards