The term web 3.0 was introduced by John Markoff back in the year 2006 and recently great developments have taken place in this space. The aim of web 3.0 is to create a decentralized web using machine-based understanding to create a data-driven semantic and open web.
As web 3.0 focuses on decentralization, this revolution has also led to a boom in crypto and DAO and as a result, many crypto projects and DAOS have emerged You have likely heard of the terms crypto and Dao over the internet before but what do they mean? what are their use cases? Their history? and what is the difference between the two?
These are some of the questions that I will be answering in this article and at the end of this article, you’ll be familiar with these two technologies which will greatly help you in making investment decisions.
Cryptocurrencies and DAOS are often mixed up and used interchangeably as people think that they are the same. However, this isn’t the case. To understand these two terms you’ll first have to develop an understanding of their parent technology which is blockchain.
Blockchain first emerged in the year 2008 and was introduced by Satoshi Nakamoto who used blockchain to create the first-ever cryptocurrency Bitcoin. Blockchain is a technology that is used to store information in such a way that it’s transparent which means that it can be tracked and viewed by other people.
It also makes it impossible to change or hack the information and so it’s very secure. These are some of the reasons why it is widely used in businesses and various other fields. The simplest way to explain blockchain and its use in crypto is to think of it as a checkbook that records all the transactions taking place and stores them.
Blockchain makes use of nodes and a consensus mechanism to operate. It’s divided into sub-parts called blocks which are verified by nodes using a consensus mechanism. As of now, there are two main consensus mechanisms that are used by the leading blockchains, proof of stake and proof of work. Blockchain technology has many uses and applications and one of these is cryptocurrency.
What Is Crypto?
Cryptocurrency is a fascinating idea that was first introduced by Satoshi Nakamoto who invented the very first cryptocurrency, bitcoin. Since then, many new cryptocurrencies have emerged some of the most prominent ones with the largest market caps are the following:
- Ethereum market cap: $219 billion
- Tether (USDT) Market cap: $72 billion
- U.S. Dollar Coin (USDC) Market cap: $54 billion
- Binance Coin (BNB) Market cap: $49 billion
- XRP (XRP) Market cap: $19 billion
- Cardano (ADA) Market cap: $18 billion
Crypto is a digital currency that can be transferred from one wallet to another without the involvement of a bank or any centralized entity. This makes the transactions much faster than the traditional banks as using cryptocurrency transfers can be made within minutes. Whereas banks can take up to days or even weeks to carry out transactions depending on the traffic and the volume of money.
The payments exist as digital data secured on a database using encryption. Crypto can be stored and transferred using crypto-wallets. MetaMask and trust wallet are two of the most used crypto wallets. If you wish to purchase crypto you can do so by going to an exchange such as Binance and buying crypto using your bank money.
Application and Uses of Crypto:
Crypto is a very flexible technology and people have developed many uses and applications for cryptocurrency. We will be looking at the top 3 uses of cryptocurrency to help you understand this technology better and understand which cryptocurrencies you should invest in.
Money transfer is the most well-known and widespread use of cryptocurrency. Crypto enables us to send and receive payments at high speeds and very low transaction fees (on some blockchains it can be as low as $0.0012). Another amazing benefit of using crypto for money transfer is that it is a P2P payment system which means that there’s no central entity like a bank involved in the transaction. Due to these features crypto is preferred as a method of payment transfer by many clients and investors.
Hotels accept cryptocurrencies
Many lavish hotels around the globe have now started to accept cryptocurrency as a method of payment making reservations and even dining in hotel restaurants. This has attracted many tourists and travelers to crypto and is a very popular use of the technology.
The rise of the gaming industry in combination with blockchain technology has led to developments in games that have never been witnessed before. Crypto games are growing very popular because of many reasons. Blockchain technology solves the issue of transactions and fraud in games making them more secure. Many games also reward the players with crypto tokens which they can use in-game to make purchases and even sell on the real market to earn. One of the most famous play-to-earn games is Axie Infinity.
What Is a DAO?
A decentralized autonomous organization (DAO) is an organization that is led by the members of the community and doesn’t have a central leader or a head. All of the individual members themselves decide which route the DAO will take and make important decisions regarding its future like technology upgrades and treasury allocations.
Smart contracts are used to lay down the rules and regulations of the DAO. They execute decisions and vote. Members with the largest share of the tokens have the most authority and their votes count the most. The members create proposals to improve the DAO to benefit the community.
The preeminent feature of this technology is that it offers an incentive to the members to vote in favor of only those proposals which are truly beneficial as it will increase the usage of the DAO and hence increase the token’s value, making them richer. Uniswap is a good example of a DAO which also has its own crypto token and it runs on the Ethereum blockchain.
Many developments in the web 3.0 space have led to the growth of many NFTs DEFIS and cryptocurrencies. This has also given momentum to DAOS as they play a major role in the government and ruling of blockchain protocols.
DAOS are very promising and many people are searching for the best DAOSA to invest in as they have provided many implications for the crypto space. But which DAOS should you keep an eye out for? Following is a list of the top 10 DAO applications which I think are worth considering:
- Curve DAO
- Maker DAO
- Decentraland DAO
- Yield Guild Games
- IBC DAO
- Merit Circle
- Flamingo DAO
- Gnosis DAO
- Aragon DAO
- Many games also reward the players with crypto tokens which they can use in-game to make purchases and even sell on the real market to earn. One of the most famous play-to-earn games is Axie Infinity.
The Differences Between Crypto and DAO
By now I’m pretty sure you have gained an understanding of crypto and DAOS and have realized that they are not the same. Now I will proceed to explain the difference between the two.
|Cryptocurrencies cannot continue to change or upgrade continuously once the source code has been written.||It can constantly be upgraded and improved as its code can be changed.|
|Crypto is a virtual currency that is mainly used for payment.||DAO is an organization that is used to run companies or ecosystems’.|
|In crypto ecosystems, the majority shareholders do not have the right to make changes and most of the changes are made by the founder.||In a DAO, decisions regarding the ecosystem are made unanimously there is no CEO.|
|The founder has the right to make changes regardless of who owns the largest share of tokens.||The greatest shareholder gets more right to vote.|
|The source code is not always public.||The source code is public and anyone can view it and make changes to it.|
Another surprising difference between crypto and DAO is that every DAO has a cryptocurrency however not every crypto has a DAO. This means that DAOs rely on cryptocurrencies to operate and the advances in crypto are what have made DAOs so effective. Cryptocurrencies have a use case or an application in the real world which is what makes them so valuable. DAOs, however, do not have any such applications or problem-solving capabilities rather they are organizations that are used to oversee crypto projects and ensure their success.
- Crypto and DAOs have recently gained popularity due to the boom in the web 3.0 space.
- Blockchain is the parent technology of both crypto and DAOS.
- Hotels accept cryptocurrencies as payment.
- A DAO doesn’t have a central leader and is led by the members of the organization.
- How they differ from each other Blockchain is groundbreaking technology.