A Decentralized Application (Dapp, dApp or DApp) is an application designed to avoid failures and are controlled by many users on a decentralized network with trustless protocols. They reward users for providing computing power with tokens.
They run on a blockchain or a peer-to-peer network of computers instead of a single computer. Dapps is quite similar to a conventional web application. The major difference between them is that conventional web applications have an Application Programming Interface (API) connecting to a database while Dapps have smart contracts connecting to a blockchain. Another key difference is that traditional applications are centralized where the back end is connected to a centralized server whereas the backend code in Dapps runs on a peer-to-peer network that’s decentralized.
Since the Dapp is still in its infancy, a clear definition of it hasn’t surfaced yet. Despite that, according to blockgeeks.com, there are 4 common features to Dapps:
- Open Source:The code in Dapps is open source and is managed autonomously. It is ideal for it to be autonomously managed, the open source code to subject to inspection and any changes to be approved either by the majority of the users or by a consensus.
- Decentralized: Any records of the user’s operation are stored on a public and distributed blockchain that enables trustless interactions while avoiding failure points.
- Incentivized: The users are rewarded for providing computing power by giving them cryptographic tokens.
- Protocol: The Dapp uses a cryptographic algorithm that is in agreement with the application community in order to show the proof of value.
Taking the above features into consideration, we can say that bitcoin was the first Dapp. Dapps can probably run on top of other cryptocurrency platforms like Ethereum.
Despite the feeling that Ethereum advocates might have about the possibility of decentralizing everything with the introduction of Dapps, the types of applications that users can build with their computing power can be restrictive.
It was stated in Ethereum’s white paper that the intention of Ethereum was to create an alternative protocol for building Dapps with a lot of prominences given to development time, security, and scaling. The white paper also splits Dapps into 3 types:
- Apps That Manage Money:This type of Dapp provides a user to exchange Ether with another user in order to settle a contract. This is done using the network’s distributed nodes in order to facilitate the distribution of data.
- Apps Where Money Is Involved:This type of Dapp mixes money with information from outside the blockchain. These smart contracts depend on the “oracles” which relays information from the outside world.
- Apps in the “Other” Category:Such type of Dapps includes voting and governance systems.
There are many Ethereum-based Dapps that have achieved millions of dollars in market cap. Some of them are Golem, Augur, and Melonport and each of them has their eyes set on rewiring the economy using blockchain technology.
As more and more platforms are adopting blockchain technology, it’s very clear that it will render some of the old practices obsolete. By adopting blockchain technology, we reduce the services offered by the middlemen by increasing its efficiency. This arises suspicion as to whether this will improve our lives or not. Whatever the answer is, with blockchain adoption rising more and more rapidly, we can only hope that this is moving to a better future towards a world unified by shared data.