We are going to start this lesson on Dapp model with
a hierarchy diagram that gives a high level view of Various Dapp model,
starting from the genesis of Bitcoin.
In this lesson, we'll review each of these models.
We acknowledge that there are many others not included
and that this diagram is by no means complete.
We encourage you to add other Models to this diagram.
After this lesson, you will be able to list some important models of Dapp
and explain the evolution of Dapp models from cryptocurrencies to cryptoassets.
Let's explore the models one by one.
Bitcoin is the pure cryptocurrency.
Every Bitcoin was minted by the protocol,
except for the genesis transaction from Satoshi to Hal Finney.
Innovation of bitcoin is the decentralized payment system that is still running,
though facing issues with scalability and price volatility.
Next, the coin and
the initial coin offering. Bitcoin code-base is
open source and the initial response to Bitcoin from the developer community,
were the releases of many new crypto currencies.
Then came the innovation of Etherium Smart Contract.
It helped automate the crowd funding for startups using
a virtual instrument called Koine and the process of initial coin offering.
This is similar to an initial public offering IPO of company stocks.
Coin ICO use a block chain to record the distribution of the coin,
receive funds, specified rules,
and to enforce any preconditions and policies.
For example a policy of some of
the Chinese ICOs is that they would not receive funds from the USA.
That is atleast at the time of our recording.
In the Dapp hierarchy,
we have included only as coined Dapps, Ethereum, and Zcash.
However, there are hundreds of ICOs and coin offerings.
It has become a popular mode for crowdfunding.
Did you know the Zcash focuses heavily on privacy and uses closed-code?
We classify any cryptocurrency that raise fronts through ICOs in the coins Dapps.
Both Ethereum and Zcash used ICO processes for that initial funding.
That's the reason for classification of Ethereum and Zcash in this category.
The next Dapp we will look at is Tokens and initial token offering.
Sometimes tokens and coins are used synonymously.
However, we distinguish between these in our model.
Token is like a Dapp coin but,
its offering is typically associated with an asset or utility.
For example, in the highly popular cryptoKitties,
a token is used to represent the kitty or all the rules for the creation lifecycle,
breeding etc are written into the immutable Ethereum block chains Smart Contract.
At pre-determined times, a certain number of new tokens are
released and auctioned off for raising new funds.
Assets are Kittys in this case,
also appreciate or depreciate in price based on the demand.
So the tokens are non-fungible.
In other words, value for Tokens can change during its lifetime.
Auger is a prediction Dapp that depends
on the wisdom of crowd and their reports on reputation
of a product to predict markets.
These decentralized participants or crowd get paid in REP tokens or reputation tokens.
These tokens represent a fraction of the fees collected if the transaction gets executed,
based on the crowds reporting.
Once again there are so many token Dapps in play,
but we have covered only two.
In the hierarchy diagram,
you will also notice that both Auger and cryptoKitties
inherit from standard tokens ERC 20 and ERC 721 respectively.
More on this, in the next lesson.
Turn your attention to DAO,
a Decentralized Autonomous Organization is an early innovation in Dapp.
DAO was an investment instrument deployed as a smart contract on Ethereum block chain.
Autonomous venture capital Dapp to be exact.
The idea was to showcase an autonomous organization without
traditional corporate governance structure for
a decentralized anonymous Fund-Raising, and automatic investing.
DAO was deployed prematurely without extensive testing.
But the idea itself was well received and DAO raised funds beyond expectation.
However, a vulnerability in the code was exploited by hackers.
This resulted in a digital heist of a significant portion of the collected funds.
You can read more in the ether thief,
placed in the resource section.
Actual events do indeed read like a thriller.
It is a nice plot for a movie.
The readers digest version of this.
This DAO heist and the solution to fix it,
resulted in the unexpected hard fork of Ethereum in July 2016.
This hard fork split Ethereum to ETH core as we use it now an ETC,
the Ethereum classic that still has the DAO bug in it.
In spite of all the negative publicity,
we feel that the Decentralized Autonomous Organization
is indeed an innovative Dapp If done right.
Bina RamamurthyTeaching Professor
