Understanding Smart Contracts and DApps

Smart contracts are self-executing contracts with terms directly written into code. They run on blockchain networks, ensuring transparency and immutability without third-party intermediaries.

Decentralized Applications (DApps) are digital applications that operate on a blockchain network rather than a single computer. They are open-source, operate autonomously, and use smart contracts for process management.

While Ethereum popularized smart contracts, other blockchains like Cardano, Polkadot, and Binance Smart Chain also offer smart contract capabilities, each with unique features and consensus mechanisms.

Smart contracts rely on 'oracles' to interact with external data. Oracles are third-party services that provide real-world information to the blockchain, enabling contracts to execute based on external events.

Executing smart contracts requires computational resources, paid as 'gas fees'. Ethereum's gas fees vary with network congestion, leading to the exploration of layer 2 solutions for cost efficiency.

DApps empower users with full control over their data, unlike traditional apps. This paradigm shift in data ownership and control is at the heart of Web3, the decentralized web.

DApps and smart contracts face interoperability challenges across blockchains. Efforts like Cosmos and Polkadot aim to create 'internet of blockchains', enabling cross-chain communication and value transfer.