As blockchain continues to encounter numerous developments, we are seeing new and exciting innovations coming into the space, including the development of decentralized applications, also known as dApps.
These applications make up an essential part of Web3, operating on decentralized networks and harnessing the power of blockchain technology.
But what exactly are dApps? I’ll endeavor to answer that question in this article.
What is a DApp?
DApps are applications or programs that run on the blockchain. They are similar to any other digital app found on your smartphone or computer, only differing in their utilization of blockchain technology.
This one difference is key because blockchain technology helps keep the data of the dApp user out of the hands of the company that built it.
In the digital space, dApps are forming a relatively new digital economy of peer-to-peer services that negates the power of dominant companies.
In addition, since the apps are decentralized, they are free from the control and interference of a single authority. Therefore, they use smart contracts for their operations.
Therefore, dApps comprise an open-source, distributed software platform that runs on a blockchain network and utilizes smart contracts to facilitate transactions.
Difference between Ordinary Apps and dApps
DApps differ from the ordinary apps we use in various ways, including:
- DApps are decentralized, meaning they run on a distributed network with no central authority. Therefore, several people can make crucial decisions. On the other hand, apps are more centralized, meaning they are run and controlled by a central authority. Such apps include all the web apps, such as Twitter and Google.
- DApps have a more peer-to-peer architecture, meaning that any user can directly communicate, transact, and even interact with other users without needing any intermediaries. Ordinary apps have a somewhat traditional client-server architecture, which infers that you must interact with a central server that processes and responds to your requests.
- Data collected in a dApp is stored on a decentralized network, such as a blockchain, ensuring data integrity, security, and resilience to any failure. On an ordinary app, any data is usually stored on centralized servers, making it prone to unauthorized access.
- DApps utilize blockchain technology for their operations, which allows for transparent and decentralized transaction processing and consensus mechanisms. However, ordinary apps operate within the traditional Internet infrastructure. As such, centralized servers and communication protocols enable their operations.
Benefits of Using Decentralized Applications
DApps offer several benefits compared to regular Web2 apps, including:
Decentralization: DApps run on a blockchain network, meaning a single entity cannot control them. In addition, decentralization means that, as a user, you do not have to worry about trust. The main idea behind decentralization in such apps is that once a developer has released a codebase of a dApp, other developers can build on top of it.
Efficiency: DApps can automate operational processes, including matching buyers and sellers of assets, in a more decentralized manner. Consequently, applications can quickly reduce broker costs.
Enhanced Security: Blockchain technology has the characteristics of being tamper-proof and enhanced using cryptographic security. DApps utilize this type of security, making them more secure against data breaches.
Transparency: DApps are integrated and function on public blockchains, allowing users to view and verify transactions and their data efficiently.
Autonomy: DApps are self-executing and do not require intermediaries. This allows users to control their data and assets better without relying on third parties.
Censorship Resistance: Having code stored and executed on the blockchain means that taking down an application without taking down every node on the network is impossible. Since peers interact directly, there is no or less censorship, thanks to decentralization.
Setbacks Witnessed in Decentralized Applications
While having all the benefits, decentralized applications have some notable setbacks that inhibit their total induction by businesses and individuals. For instance, they are at their infancy level, which means they are experimental and prone to different problems and unknowns.
There is always the worry that the applications will scale effectively in the space, as well as a concern about creating apps with a user-friendly interface.
Another issue comes from doing code modifications. Once decentralized applications are deployed, they will likely need ongoing changes to make enhancements or correct bugs or security risks.
Types of DApps
As the Web3 space evolves rapidly, new and incoming types of applications and services are upcoming. However, several general kinds of dApps are already in operation.
DeFi
Decentralized finance (DeFi) has emerged as a significant alternative to traditional finance. DeFi users participate in financial activities without the need for banks or even any other centralized intermediaries.
Such dApps include Uniswap, Aave, and GMX.
E-commerce
E-commerce dApps offer a better customer experience than ordinary apps. This is mainly because e-commerce apps ensure secure transactions are created anonymously and permanently stored on the blockchain.
Peer-to-Peer Marketplaces
A marketplace dApp means a platform where you can easily buy and sell digital assets. An example of marketplace dApps is NFT marketplaces, which allow artists and content creators to tokenize their content and sell it as NFTs quickly.
Gaming DApps
Web3 games also depend on the characteristics of NFTs as a means to offer players sovereign ownership over their in-game assets and unlock new revenue streams. As such, gamers can trade their NFTs on secondary marketplaces and track asset authenticity.
Examples of gaming dApps include Axie Infinity, Decentraland, Upland, and Splinterlands.
Social Network DApps
Decentralized social media networks store your data on decentralized networks. Therefore, you have more control over your content and provide enhanced data privacy.
Web3 social media is immune to censorship and unilateral control of user content.
Examples of social media dApps include Steemit and Mastodon, which are the best alternatives to Web2 social media networks like Facebook and Reddit.
Final Thoughts
While using dApps, users feel more secure knowing that the application’s creators have no control over how the app is used. DApps are just getting started. Therefore, in the coming years, we may encounter more and more types of dApps and even an increase in their use cases.
Web3 will continue to help developers develop these exciting kinds of apps in the future.