With the rise and growing adoption of blockchain technology, the focus is turning to a particular segment with immense potential - Decentralized Applications (dApps).
What Are Decentralized Applications (dApps)?
dApp is an abbreviation for decentralized apps. Simply put, a dApp is an application that runs on the blockchain or a peer-to-peer (P2P) network of computers instead of a single computer (or centralized servers). The main distinction between dApps and other apps or games is that dApps are created and run-on decentralised networks like Ethereum. dApps rely on a community for verification and validation since they lack a central authority or regulatory body. dApps are currently being created for a wide range of uses, including social media, marketplaces, games, finance, and entertainment.
How do dApps work?
• dApps rely on backend code, typically, a smart contract.
• This digital contract helps setting the actions needed to run the dApp according to the terms and conditions written (coded) into the smart contract.
• If the requirements of the contract are met then an action or transaction is executed inside the P2P network. All details are properly recorded and stored in the blockchain.
• If conditions are not met, dApps actions are neutralized and the system returns to its initial state.
Characteristics of dApps:
The majority of today's apps are centralised, which means that a centralised entity controls them. They offer all the information and systems required to execute operations. But with dApps, operations are carried out using smart contracts, which are open-source programmes that are simple for anybody to access. This indicates that dApps run independently, with no specific authority in charge.
Smart Contracts Explained:
A smart contract is an essential component of the blockchain and can be defined as a self-executing digital contract with the terms of conditions of an agreement between two sides being automatically verified and executed via a computer network. Once smart contracts are deployed on a decentralized network, they can't be changed. As mentioned before, dApps can run on a P2P (peer-to-peer) network or a blockchain network. BitTorrent is an example of a P2P network where a community of participants receive, send and share data without a third-party intermediary.
apps operate on open public decentralized platforms where no one person or group has full control. Decentralized storage is also another key feature.
All required changes are decided upon by a consensus of the majority of users. This requires the codebase to be available to all users for evaluation.
Offer cryptographic security:
Decentralized blocks of data are validated and proven true. dApps are both built and run on a blockchain system - commonly using the Ethereum network. The app is validated with the use of cryptographic tokens, which are needed to access the application. In the case of Bitcoin, the largest example of a decentralized app, the mining process provides new coins to those who lend their computer's capacity to process transactions, ensure security, and maintain synchronization of the whole network.
Benefits of decentralized applications:
There are a number of features that make decentralized applications a great asset. They provide the following benefits:
The program's ability to safeguard user privacy is one of the biggest advantages of a decentralized app as it’s not required that users give out their personal information to access an app’s functionalities. dApps use smart contracts to complete the transaction between two anonymous parties.
Once a dapp is set up, it runs independently by a community of users, without external tampering or third-party involvement. This means that decentralized applications also do not depend on centralized, hierarchical entities to make decisions or implement changes.
Data stored on a blockchain is nearly impossible to be tampered with or otherwise changed as a blockchain’s consensus algorithms ensure data stored is protected and resistant to change. Also, a fault tolerance feature, whereby even if a single node in the network is functioning, the decentralized platform would still be available, it would also be unlikely that a hacker could target enough nodes to neutralize a dApp.
Once a smart contract is deployed on the blockchain, the network is always able to serve parties looking to interact with the contract. As such, hackers cannot launch denial-of-service attacks targeted toward individual dapps. The Ethereum blockchain is a flexible platform, enough to enable the quick development of dApps for different industries, providing an infrastructure that developers can use to focus their efforts on creating innovative digital applications.
Drawbacks of Decentralized Applications
Decentralized applications are still in the early stages and as with any emerging technology, they are subject to unknowns. Investing in a decentralized environment has the following weaknesses and disadvantages:
There are some question marks as to whether these types of applications are able to scale effectively compared to centralized networks. This can be a challenge if running an app requires a big number of computational resources, leading to severe network congestion.
DApps are, for now, challenging to maintain and update as any changes need to meet the majority consensus of users in a blockchain network.
Conventional apps are usually easy to use for common digital audiences, who are accustomed to a certain type of user interface. dApps must match these expectations and experiences, which can be challenging when end users have to adapt to new processes such as using private and public login keys instead of the usual usernames and passwords.
Performing code modifications is another limitation posed by dApps as the data and code published to the blockchain are hard to modify making it hard for developers to implement enhancements, fix bugs, and address security risks.
dApps are still in their early stages. However, there are already thousands of dApps that offer myriad services, be it playing games, investing in DeFi, or trading NFTs. There are almost 2.4 million daily active users of dapps. But there's still a long way to go. Watch out this space for further updates on dApps.