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What are Decentralized Applications

What are Decentralized Applications (DApps)?

Over a decade ago, when Bitcoin was created, people were amazed by blockchain-based virtual money that allowed you greater control over your own finances. When Ethereum came along, a yet more wonderful concept came into play- that of a decentralized application.

So what are decentralized applications? DApps are software programs that exist and run on blockchain networks. They provide a range of financial and other products and services without any central authorities watching over them.

If you are new to the blockchain space, ‘what are decentralized applications?’ is a question you still may have. Let’s find what are DApps in blockchain, types of DApps, and yet more in this post, shall we?

What are DApps in Blockchain?

‘DApp’ stands for decentralized application, as we know. It’s a type of software that runs on a blockchain network instead of a single computer server. This means that a DApp has its own code, data, and storage that’s not controlled by any central authority.

Decentralized apps are a relatively new concept that is based on blockchain technology. Blockchain is a digital ledger that records and stores transactions in “blocks” that are linked together through cryptography, creating a secure and tamper-proof chain of records.

The concept of DApps is still in its early stages and it is not yet clear what the full potential of this technology is. DApps also have the ability to create trustless environments, meaning that the participants in the DApp do not need to trust each other to use the application. Additionally, DApps are transparent, meaning that all transactions and interactions are recorded on the blockchain and can be viewed by anyone.

Furthermore, types of DApps can be used in various industries and fields, such as finance, gaming, social media, and more. They have the potential to disrupt traditional business models and enable new ways of working and interacting.

Following the rule of blockchains, DApps run on many different computers worldwide, making a DApp harder to hack or shut down than traditional apps. The main difference between DApps and traditional applications is that they can run without any third parties involved! This means very low fees, no censorship, no central point of failure, and more flexibility than you can imagine.

However, it is important to note that the development and adoption of DApps is still in its early stages and there are still many challenges to be addressed before they become mainstream.

How Does a DApp Work?

How does a DApp Work
What are decentralized applications, and how do they work?| source

Now that we know ‘what are decentralized applications?’, let’s find out how the many types of DApps work. DApps work by using blockchain technology, and therefore they follow a blockchain’s way of functioning. For the uninitiated, a blockchain is an encrypted database that stores information about transactions. Each transaction is stored in blocks linked together chronologically in a chain (hence the name). This creates an immutable ledger of all transactions on the platform, meaning that no one can tamper with any part of it without leaving evidence behind.

A DApp has specific characteristics that define its functionality. These include being open source, decentralized, utilizing rewards, and having a specific protocol.

Open source means that the code base of the DApp is available for anyone to review and that changes to the application are determined by the consensus of the majority of users.

Decentralization means that all operational records of the DApp are stored on a public and decentralized ledger, such as a blockchain, to ensure that control does not fall into the hands of a centralized authority.

Rewards are given to validators within the blockchain who invest work, such as computing power and electricity, to verify transactions and add blocks to the chain. These rewards are usually in the form of cryptographic tokens.

A specific protocol is also necessary, where the community around the DApp agrees on a cryptographic algorithm to achieve consensus. Examples of this include Bitcoin and Ethereum, which use Proof of Work and Proof of Stake.

Bitcoin is often considered as the first decentralized app as it implements all of these characteristics. It is an open-source software that runs on a decentralized blockchain and utilizes tokens that are generated using a specific protocol. This allows for efficient transactions without intermediaries and a centralized controlling entity.

Whatever services a DApp provides, it does so by facilitating P2P (peer-to-peer) communications between service providers and users through blockchains.  

What are the Different Types of DApps?

‘What are decentralized apps’ is something we know, but how many types of DApps can there be? DApps are typically open source, so anyone can see and use their underlying codes to build yet more DApps. Depending on how they are created, there are three types of DApps, namely:

1. Type 1 DApps, also known as “blockchain-native” DApps, are decentralized applications that have their own blockchain. These DApps are built on their own unique blockchain infrastructure, and are not dependent on any other blockchain or protocol. The most well-known example of a Type 1 DApp is Bitcoin, which is the first decentralized digital currency and has its own blockchain. Other alternative cryptocurrencies such as Litecoin, Bitcoin Cash, and Dash also fall under this category, as they also have their own independent blockchain.

2. Type 2 DApps are built on top of existing blockchain networks, such as Bitcoin. They operate using their own protocols and tokens, and typically serve as platforms for decentralized exchanges or other types of decentralized marketplaces. The Omni Protocol is a well-known example of a Type 2 DApp, which allows for the trustless and peer-to-peer exchange of assets using the Bitcoin blockchain as its foundation.

3. Type 3 DApps are built on top of existing Type 2 DApps, using their protocols and tokens as a foundation. An example of this is the SAFE Network, which is a decentralized data storage and communications network that replaces centralized data centers and servers with the computing resources of its users. This network allows for the creation of censorship-resistant websites and applications, and utilizes the Omni Protocol to issue its own tokens, called SafeCoins, for its functional aspects.

How does a DApp Differ from a Traditional App?

How does a DApp Differ from a Traditional App
What are decentralized apps: differences between DApps and traditional apps| source

A DApp and a traditional app are not really that different at a glance. They’re both pieces of software that run on your computer or mobile devices. The differences primarily lie in how they’re developed and what they do.

A traditional app is developed by a company or individual and can be downloaded from an app store like Google Play or the Apple App Store. A DApp is created using blockchain technology, which means it’s hosted on decentralized networks rather than centralized servers.

Traditional apps are built on closed platforms, while DApps are open source, so anyone can contribute to them if they wish. However, this doesn’t mean DApps can be built free of cost. Some expenses will still be incurred when building your own application from scratch (or modifying someone else’s).

Key Advantages of DApps over Traditional Apps

1. Cost-effective
2. Ease of use
3. User-friendly Interface

What are the Key Advantages of DApps over Traditional Apps? 

The key advantages of DApps over traditional apps are as follows:

1. Cost-effective

DApps are known to be more cost-effective than traditional apps. The cost of developing a DApp is lower than creating a conventional app. This is because a DApp does not require the same broad infrastructure as a conventional app, which makes it cheaper.

2. Ease of use

The DApps can be accessed from anywhere on any device and at any time. The infrastructure flexibility makes it easy for individuals to access their data from anywhere on any device. 

3. User-friendly Interface

DApps have a user-friendly interface that allows users to navigate through their data easily without much effort. The user interface makes it easy for users to interact with the DApps without difficulties.

Benefits of Decentralized Applications

1. Open Source
2. Transparent
3. Decentralized
4. Faster Development Cycles

What are the Benefits of Decentralized Applications?

What are the many benefits of DApps? Let’s see:

Benefits of Decentralized Applications
Source: Freepik

1. They’re Open Source

DApps are built on open source code, meaning that the source code is publicly available for anyone to review and contribute to. This allows for a transparent and collaborative development process, as well as encourages security and integrity of the application. With open source code, developers can easily identify potential vulnerabilities and bugs, and fix them. This allows for a more secure and stable application, as well as allowing for new features and functionalities to be added. Additionally, open source code allows for a community of developers to collaborate and contribute to the development of the application, which can lead to a more diverse and robust feature set. This also allows for a more secure application, as more eyes on the code means that potential vulnerabilities are more likely to be discovered and fixed.

2. Transparent

DApps are transparent, meaning that all transactions and interactions are recorded on a public ledger (blockchain) and can be viewed by anyone. This allows for greater accountability and trust among users. The transparency of the blockchain ensures that the data is tamper-proof and that the activities of users can be audited. This means that any bad actors can be easily identified and dealt with, creating a safer and more trustworthy environment for all users. Furthermore, transparency also allows for greater accountability and trust among users, as all actions are recorded and can be easily traced. This also allows for greater transparency and accountability among developers, as all changes to the code are recorded and can be easily traced.

3. Decentralized

DApps are decentralized, meaning that they are not controlled by a single entity and are not subject to a single point of failure. This makes them more resilient and secure than centralized applications. With a centralized application, there is a single point of failure, meaning that if that point goes down, the entire application goes down. With a decentralized application, there are multiple points of failure, meaning that if one point goes down, the application can still function. This makes DApps less vulnerable to single points of failure and attacks. Furthermore, decentralization also allows for greater autonomy and control for users, as they are not dependent on a centralized authority to govern the application. This means that users have more control over their own data and can make decisions about the direction and development of the application. Additionally, decentralization also allows for greater scalability, as the application can be spread across multiple nodes, allowing for more users and transactions to be handled simultaneously.

4. Faster Development Cycles

DApps development cycles are faster than traditional centralized applications, as they are not dependent on a single entity for development and deployment. With open source code, developers can quickly and easily make changes to the application and contribute to its development. Additionally, with decentralized governance, changes can be made and implemented faster as there is no need for a centralized authority to approve and make changes. This allows for faster development and deployment, as well as faster implementation of new features and functionalities. Furthermore, faster development cycles also allow for a more agile and responsive application, which can adapt quickly to changing user needs and market conditions.

5. Zero Downtime

Most types of DApps have zero downtime, meaning that they can function continuously without interruption. This is because DApps are built on decentralized networks, which are spread across multiple nodes. This means that even if one node goes down, the other nodes can still function and keep the application running. This ensures that the application is always available and that users can access it at any time. This also allows for greater reliability and robustness, as the application can handle more traffic and transactions without interruption.

6. Resistance to Censorship

DApps are resistant to censorship, which means that they cannot be shut down or controlled by a centralized authority. This is because DApps are built on decentralized networks, which are spread across multiple nodes. This makes it difficult for a centralized authority to shut down or control the application, as it would require shutting down all the nodes. This means that DApps can be used to promote free speech and expression without fear of censorship. Additionally, this also allows for greater security, as a DApp can’t be shut down by a single entity or government.

7. Complete Data Integrity

DApps ensure that data is tamper-proof and that the activities of users can be audited. This means that any bad actors can be easily identified and dealt with, creating a safer and more trustworthy environment for all users. Because DApps are built on blockchain technology, all data is recorded in a permanent and unchangeable way, meaning that it can be trusted and relied upon. This provides a more robust and secure environment for data storage, and it allows for a more transparent and auditable system.

8. Trustless Computation/Verifiable Behavior

DApps operate in a trustless environment, so that users do not have to trust a central authority to ensure the integrity of the application. Instead, the decentralized network ensures the integrity of the application through the use of consensus algorithms and cryptographic techniques. This allows for verifiable behavior and ensures that the application operates as intended. Additionally, this also allows for greater security, as users can verify the integrity of the application and ensure that it is operating as intended. This trustless environment also promotes greater transparency, since users can see the entire history of transactions and interactions on the decentralized network. This helps to promote trust and confidence in the application and its operations.

Drawbacks of Decentralized Applications

Decentralized applications (DApps) are new and exciting, but they have their share of drawbacks as well.

The most common problem with DApps is that they are challenging to maintain, debug and update. This is because all changes require consensus from the entire blockchain-based network. This can be problematic if one node goes offline or any other network issues arise.

Another issue with DApps is that they can be hard to scale. Decentralized networks are not as easy to scale up as centralized networks, which makes it more difficult for developers to create user-friendly experiences for end users. 

1. Maintenance 


Decentralized applications can be difficult to maintain, as they rely on a decentralized network of nodes to function. This means that there is no central authority responsible for maintaining the application, and that maintenance tasks must be distributed among the nodes. This can be a complex and time-consuming process, as each node must be updated and maintained separately. Additionally, this can also lead to inconsistencies and errors, as not all nodes may be running the same version of the application. This can make it difficult to ensure the smooth and reliable operation of the application.

2. Hard to Scale

Decentralized applications can be difficult to scale, as they rely on a decentralized network of nodes to function. This means that as the number of users and transactions increases, the number of nodes required to support the network also increases. This can make it difficult to handle large numbers of users and transactions, as the network can become congested and slow. Additionally, as the network grows, it can become more difficult to manage and maintain, which can lead to increased complexity and reduced performance.

3. Network Congestion

Decentralized applications can experience network congestion, as they rely on a decentralized network of nodes to function. This means that as the number of users and transactions increases, the network can become congested and slow. This can make it difficult to handle large numbers of users and transactions, and can lead to delays and reduced performance. Additionally, network congestion can also lead to increased fees and costs, as users may need to pay more to get their transactions processed in a timely manner.

4. User Experience

Decentralized applications can lead to a poor user experience, as they rely on a decentralized network of nodes to function. This can make it difficult to provide a smooth and reliable experience for users, as the application may be slow or unresponsive. Additionally, decentralized applications can also be difficult to use, as they may require users to have a certain level of technical knowledge in order to interact with the application. This can make it difficult to attract and retain users, as they may find the application too complex or frustrating to use.

5. Centralization

While ‘decentralized’ applications are designed to be decentralized, some types of DApps may not be truly so and may have central points of control. This can lead to the same issues of centralization that traditional centralized applications have, such as lack of transparency and control by a small group of people. Additionally, if a small group of users or entities control a large portion of the network, they may have an outsized influence on decision-making and governance. This can lead to issues such as censorship, lack of diversity of opinion, and potential manipulation of the network.

What are Examples of DApps?

There are many different types of DApps, each with their own unique functionality and use cases. Some DApps examples include:

  • Cryptocurrency Exchanges: These DApps allow users to buy, sell, and trade cryptocurrencies using a decentralized platform. Examples include Uniswap and Sushiswap.
  • Gaming: Decentralized gaming platforms allow users to play games and earn cryptocurrency rewards. Examples include Axie Infinity and CryptoKitties.
  • Social Media: DApps examples like Steemit and Minds allow users to create and share content on a decentralized platform, where users are rewarded for creating and curating content.
  • Supply Chain Management: DApps like VeChain and Waltonchain are used to track the movement of goods through supply chains, providing transparency and reducing the need for intermediaries.
  • Decentralized Finance (DeFi): DApps examples like Aave and Compound provide decentralized financial services such as lending, borrowing, and trading of assets.
  • Identity and Self-Sovereign Identity: DApps examples like uPort and Civic allow individuals to control and manage their personal information and identity, enabling them to prove their identity in a variety of contexts.

These are just a few examples of the wide variety of DApps that are currently available, and many more are being developed and launched on a regular basis.

What are DApps in Blockchain used for?

DApps are used for a whole lot of things. You can use DApps to buy clothes, sell houses, and everything in between. Some use cases of DApps include:

1. Cryptocurrency Wallets

DApps in blockchain can be used to create decentralized cryptocurrency wallets. These wallets are built on top of blockchain technology and allow users to store, send, and receive digital assets in a secure and transparent manner. They also provide users with full control over their private keys, giving them complete ownership of their funds. Unlike traditional centralized wallets, where the user entrusts their funds to a third-party, decentralized wallets allow the user to retain control of their funds and ensure that the funds are not subject to theft or misappropriation. Moreover, decentralized wallets can be used in various platforms like mobile, web and hardware wallets to provide more accessibility and security to the users.

2. Decentralized Exchanges (DEX)

DApps in blockchain can also be used to create decentralized exchanges (DEX). DEXs are platforms that allow users to buy, sell, and trade cryptocurrencies without the need for intermediaries. This eliminates the need for centralized exchanges and reduces the risk of hacking and other security breaches. DEXs also provide increased transparency and control over funds, as users are not required to entrust their funds to a third party. Furthermore, DEXs can be integrated with other protocols such as Automated Market Makers (AMMs) and order book-based trading to increase the liquidity and reduce the slippage.

3. Voting Platforms

Blockchain technology can be used to create decentralized voting platforms. These platforms use smart contracts to ensure the anonymity and integrity of the voting process. The use of blockchain technology ensures that the vote is recorded immutably and transparently. This can be used in various industries such as in government, nonprofits and corporations for voting on proposals, and decision making. Moreover, the platform can be integrated with other protocols such as Proof of Stake (PoS) and Delegated Proof of Stake (DPoS) to provide a more efficient and fair voting process.

4. Gaming

DApps in blockchain can be used to create decentralized gaming platforms. These platforms allow users to play games and earn cryptocurrency rewards. The use of blockchain technology ensures that the game is fair and transparent, and that users retain complete control over their in-game assets. In addition, the platform can be integrated with other protocols such as Non-Fungible Tokens (NFTs) to provide more ownership and scarcity to the in-game assets.

5. Social Media Platforms

Types of DApps in blockchain can also be used to create decentralized social media platforms. These platforms allow users to create and share content on a decentralized platform, where users are rewarded for creating and curating content. This eliminates the need for centralized social media platforms and reduces the risk of censorship and data breaches. Additionally, the use of blockchain technology ensures that user data is secured and protected, and that users retain complete control over their data. Furthermore, the platform can be integrated with other protocols such as token economies to incentivize the users to create and curate valuable content.

Conclusion

We do hope this post has made clear the answer to your question: ‘what are decentralized applications?’ Although the ultimate impact this technology could have on everyday life is hard to predict, it’s clear that decentralized applications are gaining momentum. Increasingly larger companies are showing interest in utilizing this technology, and business leaders may soon be trying to incorporate DApps into their company’s products. One thing is for sure though- DApps will be a huge part of the upcoming digital age.

Frequently Asked Questions (FAQ)

1. What are Decentralized Apps? 

Decentralized apps are platforms built on top of blockchains. It runs on multiple computers rather than on a single computer. 

2. What are Smart Contracts?  

Smart contracts are a way to write an agreement between two or more parties without human intervention. They can be used to automate the execution of an agreement and avoid the need for a third party to manage it.

3. What are the Benefits of DApps? 

The main benefit of DApps is that they are decentralized. This means that unlike traditional apps, no central authority controls a DApp. Instead, the underlying code is open source and publicly available for anyone to see.

4. Where can I find a DApp Developer? 

There are a lot of great resources online, but one of the best ways to start is by talking with people you know who have had DApps created before. They may be able to recommend a developer they’ve worked with in the past, or they may have connections that can help you find someone who meets your needs.

If you don’t have any leads like that, you can check out local meetups for developers and designers in your area—they usually host events where potential clients and freelancers can meet and discuss projects.

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