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What Are Decentralized Applications (dApps)

What Is A Decentralized App?

dApps meaning Decentralized applications, are distributed open-source software applications running on a P2P or peer-to-peer blockchain network rather than on one system. DApps are quite similar to many software applications that P2P-supported websites and mobile devices support. As the very name suggests, dApps are decentralized, enabling anyone to build on top of what a developer releases in a dApp’s codebase and do not require single control and authority over it. A dApp is used to create multiple applications, including decentralized web browsing, finance, social media, and gaming.

Developed on a decentralized network with the support of a blockchain distributed ledger, a dApp can easily perform data processing via distributed networks and safely execute transactions. These apps are, therefore, quite commonly built with the help of the Ethereum platform. The Ethereum blockchain and other distributed ledger technologies have helped dApps gain considerable popularity. dApps are always accessible and foolproof, making them one of the most used applications amongst developers. 

Learn: What is a Blockchain Wallet? Types, Functions, Safety, Pros & Cons

Understanding dApps

Standard web applications like Twitter or Uber run on systems operated and owned by a particular organization with complete authority over the app’s workings. Even though it might allow more than one user on the front end, the organization fully controls the backend.

DApps are usually made to run on a blockchain network or P2P network. If we take applications like BitTorrent, Popcorn Time, and Tor, for instance, we can say that these applications running on systems belonging to a P2P network allow more than one participant to consume, feed, or seed content or even perform both functions at the same time.

Regarding cryptocurrencies, dApps strictly run on a blockchain network in an open-source, decentralized environment that is made public and free of any control and by one particular authority. For instance, to create a dApp similar to Twitter, developers can put it on a public blockchain, and every user can publish messages. 

How Do dApps Function?

Decentralized apps have three common attributes and characteristics:-

  • Open source: dApps are open sources and depend on the decisions made by most users for every change required. The codebase of these applications is usually available to every user for evaluation.
  • Decentralized storage: dApps provide decentralized storage that enables data to be stored on decentralized blocks.
  • Cryptographic: This enables decentralized data blocks to be validated and proven true.

DApps commonly use Ethereum for both storing and executing on a blockchain system. Validation is carried out with the help of cryptographic tokens required for application access.

These applications are similar to conventional apps because they use the same front-end code for rendering a web page. The back-end code of dApps is different because it runs on a decentralized P2P network. This enables dApps to be free from a single authority. 

Unlike traditional applications with centralized servers and database support, dApps are supported by smart contracts stored on a blockchain. Most developers use Ethereum to run smart contracts with coded rules and help mediate transactions. They are often only a part of the whole dApp and have only back-end operations. To develop decentralized applications on the smart contract system, you must combine multiple smart contracts and use third-party systems for front-end development.

Blockchains run by smart contracts have a ledger of data records stored within dispersed blocks instead of a specific central location. Every block of data is linked and governed by cryptographic validation. It is also important to note that not all dApps run on standard web browsers. Some may only work on websites having customized code for running or opening a specific application.

Advantages of Using Decentralized Applications

dApps are highly advantageous due to being about to safeguard the privacy of a user. Users are not required to submit their private information for using the in-app functions with decentralized apps. They make use of smart contracts for making a transaction between two unknown parties without depending on a single authority. There are many more benefits provided by decentralized applications. They are as follows:-

  • Fault tolerance: Decentralized networks can still be available, even if just a single node is working. Due to not being dependent on a single centralized network, it is not susceptible to hacking.
  • Security: Data storage in blockchain is considered to be the most secure due to blockchain consensus algorithms that make sure that data stored in blockchain is not susceptible to change.
  • Flexibility: The Ethereum blockchain is flexible and makes room for rapid development of dApps for various industries.

Disadvantages of Using Decentralized Applications

Development of dApps is still going through an experimental stage that can bring about various problems and unknowns. Many people question the effective scalability of the applications, especially during computation overloading on a network leading to network congestion. Some of the major disadvantages of decentralized applications are as follows:-

  • Maintenance: Maintaining, debugging, and updating DApps can be challenging because it requires a cumulative decision made by all the peers in the blockchain network.
  • Challenging to scale: Decentralized networks are somewhat harder to scale, unlike centralized networks.
  • Network congestion: Using quite a few resources in a dApp will back up the entire network leading to network congestion.
  • User experience: dApps do not operate the same way as centralized apps, and many users say it is challenging for developers to give the end-users a user-friendly experience.

Difference Between Decentralized and Centralized Apps

There are two points of difference between centralized and decentralized applications. They are as follows:-

Centralized Applications

Decentralized Applications

A centralized app is owned by a single company that controls every server it resides on.  A decentralized app runs on a peer-to-peer network of systems or on a blockchain that allows users to make transactions directly without depending on a central authority.
Users of centralized apps interact with the in-app features by downloading an app copy and then by sending and getting data back and forth from the company’s server.  dApp users pay the developer in cryptocurrency for downloading and using the source code (smart contract) of the program. 

Some Good Examples of Decentralized Applications

Countless dApps are currently being developed, used, and sold. Some major examples of dApps are as follows:-

  • Chainlink: It is a middleware software created for providing foolproof computations, inputs, and outputs dedicated to Oracle networks. 
  • TraceDonate: It is a service linking donors and charities to beneficiaries to develop a strong bond of trust, ensuring that the donations given reach those in need. The funds are stored in a digital wallet where the donor can track how and where the donation is used for.
  • Minds: This dApp-based social media platform runs on open-source code that allows users to encrypt their personal data.

Ethereum dApps

Most of the popular dApps are developed on Ethereum, which is a smart contract blockchain. Some of the best Ethereum dApps are –

  • Compound: Provides a DeFi lending protocol.
  • Uniswap: Users can swap tokens peer-to-peer via this decentralized exchange system.
  • PoolTogether is a crypto lottery promising no loss.
  • Decentraland is a metaverse platform where users can create their avatars, interact with each other, and purchase NFTs representing virtual objects or virtual land.
  • Audius is a decentralized platform specializing in music streaming.
  • Gods Unchained is a card game that is NFT-powered.
  • LooksRare is an NFT marketplace known for rewarding users for their participation.

Conclusion

dApps are still in the early stage of development, and there is still room for growth and betterment. Even though there is a long way to go, it is rapidly gaining popularity. Once it is perfected, nothing can stop dApps from becoming the next popularly used app in the world. Learning about new things can be fun. If you want to learn more about blockchain to begin a lucrative career in it, you can enroll yourself in the  Advanced Certificate Program in Blockchain Technology from upGrad.

What are the various types of dApps?

There are three types of dApps. Type 1, Type 2 and Type 3.

Where are DApps generally hosted?

dApps or decentralized applications usually run on distributed networks and are not hosted upon a centralized server.

Do DApps require servers?

DApps do not require centralized servers where the data is stored. They are usually saved on the blockchain.

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