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Difference Between Dapps, Crypto Wallets and Smart Contracts

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This article focuses on discussing the differences between dApps, digital wallets, and smart contracts. The following topics will be discussed here:

  1. What are dApps?
  2. What Are Crypto Wallets?
  3. What Are Smart Contracts?
  4. dApps vs Digital Wallets vs Smart Contracts.

Let’s start discussing each of these topics in detail:

What are dApps?

A decentralized application is referred to as dApp. They run on a peer-to-peer network based on the distributed nature of Blockchain.

How dApp work?

dApps are higher-level applications that use smart contracts to deliver their functionality. A smart contract is a shot piece of logic that is saved and executed by machines on the blockchain.

  • dApps, like other applications, are made up of multiple technologies. A technology stack similar to what one would see in a typical web application. 
  • dApps need web hosting to store and run application files, server software to operate program logic, a database to store data, and a user to interact with the web apps front-end via a browser. 
  • The only difference with dApp is that the database files and much of the application logic aren’t stored or executed on a single machine or server. They are stored on the blockchain network and executed on it. 
  • The blockchain protocol oversees the concurrent execution of computer code, ensuring that the same security that protects transaction data on the blockchain also protects the application code.

Decentralized applications that are distributed are particularly resistant to attacks and have high fault tolerance. Because they are embedded in a blockchain, they have direct access to the blockchain’s capabilities and value structures, such as Tokenized ownership and identity management, which make user authentication and payment processing super easy.


What are Crypto Wallets?

A crypto wallet is software that enables sending and receiving cryptocurrencies. The wallet is more like a key chain that stores the records of the transactions and carries private keys that are each coupled with a public key address than it is a wallet that holds Bitcoins. 

  • One can keep as many keys in the wallet as desires. 
  • A private key is a string of letters or numbers that is cryptographically linked to a public key address. 
  • It can be proved to the Bitcoin network that one holds the coins linked with the matching public addresses using the private keys. 
  • To use the information in the wallet on the network, one will need to use some kind of software like Metamask, ZenGo, etc. 
  • The wallet doesn’t contain currency, it contains keys.

What Are Smart Contracts?

Smart contracts are pieces of code that allow the blockchain to immediately transport or move data. These are the instructions on how and when data should move. Combined with the other aspects of the blockchain, these instructions become useful because no central authority is required to approve the instructions. 

  • Smart contracts can operate with a variety of other technology including banking services, IoT, etc. 
  • This adaptable technology can be programmed to work with a variety of sectors and can be used in a variety of scenarios.
  • Smart contracts are similar to agreements in that they allow participants to see if certain requirements and conditions were met. 
  • If the pre-set criterion or conditions are not met, smart contracts have the potential to ‘digitally lock’ an asset.

How do smart contracts work?

Smart contracts can be thought of as self-executing pieces of code, but there are certain distinctions to be made. 

  • When smart contracts operate on a blockchain, they must be initiated with a fee. 
  • Smart contracts do not run unless they are initiated. 
  • When they are initiated, they all run at the same time on all machines participating in the network. 
  • Given that all the computed are running at the same time, the nodes within the blockchain come to a consensus (By consensus, we mean that a general agreement has been reached. 
  • In regards to blockchain, the process is formalized, and reaching consensus means that at least 51% of the nodes on the network agree on the next global state of the network) on the results of the code.


dApps vs Crypto Wallets vs Smart Contracts

Below are some of the differences between dApps, digital wallets, and Smart contracts:



Crypto Wallets

Smart Contracts

DefinitionA dApp is a decentralized application. It can be fully or partially decentralized.It is software that enables sending and receiving cryptocurrencies. A smart contract is a short piece of logic that is saved and executed by machines on the blockchain. The logical bricks of decentralized apps are smart contracts.
  • Backend code operates on the decentralized programs in dApps.
  • The application’s logic is stored on a network. 
  • Allows users to store, manage, and trade their cryptocurrencies.
  • Carries private keys that are each coupled with a public key address.
  • Used to implement agreements among participants.
  • Smart contracts are used to run DApps, which connect members to providers directly.
  • These are used to automate the process by accelerating the next activity when certain conditions are met.

To try a dApp a wallet is required and some ETH. 

  • A wallet allows you to connect or log in.
  • ETH is used to pay for the transaction fees.
  • The cost of building a crypto wallet depends on a variety of factors like backend, OS (Android, iOS), Design, etc. 
  • The transaction costs charged by the crypto wallet are dynamic, meaning they can vary depending on factors such as transaction size.
  • Contract transactions are charged in gas. 
  • Factors like the amount of byte code, transaction data, flat fee of gas, etc. determine the cost of creating a smart contract.
  • dApps are used to create applications for decentralized web browsing, finance, and social media.
  • Some of the examples are Chainlink a middleware software, Minds a social media platform, etc. 
  • Digital wallets are used for payments, money storage, digital access to loyalty schemes, secure hosting of banking data, etc.
  • Some examples of crypto wallets are Coinbase, Electrum, Ledger,  etc.  
  • Smart contracts can be used for applications for gaming, healthcare, real estate, and financial purposes like trading, investing, etc.
  • Some smart contract cryptos are Ethereum, Solana, Cardano, Avalanche, etc.
  • Provides safety from censorship.
  • Resistant to attacks and have high fault tolerance.
  • Smart contract auditing and penetration testing should be done for the security of a dApp.
  • Various security safeguards are built into crypto wallets to protect against theft and other threats.
  • Offline crypto wallets are considered the best option from a security perspective.
  • Smart contracts can be regarded as secure as their execution and transfer of value between the parties are strictly enforced and can not be manipulated.
  • dApps are decentralized, thus data will be accessible even if a single server is working and all servers are down.
  • They are open source, hence encouraging faster and more secure development of the ecosystem.
  • In Crypto wallets, no intermediaries are needed to communicate.
  • All the data is encrypted.
  • Transaction fees are less due to automation and the absence of human errors.
  • They can be programmed to work with a variety of sectors and can be used in a variety of scenarios.
  • They don’t need brokers to confirm the agreement, hence they eliminate the risk of manipulation by third-party.
  • They are encrypted, keeping all documents safe from infiltration.
ExamplesChainLink, KYC-Chain, etc.Metamask, ZenGo, Coinbase, etc.Smart contract cryptos are Polkadot, Ethereum, Ergo, etc.

Last Updated : 01 Jun, 2022
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