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What are Decentralized Apps or DApps?

What is a dApp? What do dApps serve? What is a “dApp”? Many people don’t know what a dApp is, so let us start at the beginning.

The most prominent and well-known use of blockchain technology is cryptocurrencies. This is not the only way to utilize this technology. The blockchain is more than just cryptocurrency. Decentralized apps (dApps), are a great example.

If you place an app on the blockchain, it will remain there forever with all of its data unless thousands of users agree to remove it. Although you may be sued for the content of your app, the content will not be removed. Kate Haskova is Head of Delivery at 8allocate.

So what are Decentralized Apps then?

Decentralized apps (or dApps) are computer programs that run on a distributed network. They do not have a central authority and the performance of dApps is determined solely by their users. A developer company creates software for a particular function and users then install it on their own devices. The performance of dApps also depends on the devices used.

With the introduction of peer-to-peer networks (P2P), the first decentralized apps were created. P2P networks are used to run decentralized apps like Tor, Popcorn Time, and BitTorrent. dApps were born out of the explosion in blockchain technology. Decentralized apps are, strictly speaking, cryptocurrency, including Bitcoin. We will refer to blockchain-based decentralized apps further on in this article.

And the difference between DApps and Apps are?

A centralized app is not decentralized. It doesn’t have one central decision-making point. Traditional, centralized apps run their backend code on a centralized server. A dApp backend codes runs on a distributed network.

This crucial difference offers several benefits to dApps

  1. Tolerance for faults. Standard apps will stop working if the central server is down. This problem is not present for dApps as the failure of one node will have no noticeable impact on the network.
  2. Ability to handle an influx of requests. A decentralized network generally has a higher computing power than a single server. This means that an unexpected influx of users will not cause slowdowns or disruptions to the app’s performance. This applies both to legitimate users as well as DDoS attacks.
  3. Scalability. Scalability. Developers of standard apps with a higher number of users will need to increase their server capacity. Decentralized apps are not required; the network’s ability grows with its participants.
  4. Resistance to unwelcome changes and censorship It is difficult to make changes to an app without approval from all participants or to censor its content. dApp users have complete control over their data and assets.
  5. Security boosted. Security vulnerabilities are opened up by the centralized processing unit, giving hackers an easy target. This makes dApps more secure than regular apps.
  6. There is no need to use an intermediary. Transactions are completed by intermediaries in traditional apps. Apps that are decentralized connect users with service providers directly.
  7. No downtime. Even if one node of the network goes offline, the decentralized app will still work.

This difference has its advantages.

  1. It is more difficult to introduce innovations and improvements than regular apps.
  2. It is not well-suited for apps that have few users.
  3. dApps are not well-known and experience slow growth in their user base. dApps are still relatively new and unexplored to many potential users. This slows down their development.

Other distinctive features are also common in dApps:

  • Apps that are decentralized are often open-source. This increases trust and transparency by allowing anyone to view the source code.
  • dApps have their own digital currencies (tokens), that allow users to access certain functions.
  • Decentralized consensus is the basis for all network decisions, including transactions validation.

There are many types of Decentralized Apps

The type of blockchain used is one of the best ways to classify dApps.

  • Apps that are built on their own blockchain. This type of dApp is most well-known in Bitcoin and Ethereum.
  • Arrs run on Type 1 apps’ blockchains but use their own tokens. Augur is an example of such a decentralized app. It is built on Ethereum’s blockchain.
  • Type 2 source codes are required for apps to function. The SAFE Network is an example of this, as it uses the Type 2 app Omni Protocol for its tokens.

Another way to classify dApps are by their purpose.

  • Financial apps. These apps give users the tools they need to manage their crypto and fiat finances. They allow users to manage their savings, wills and other financial matters.
  • Partially financial apps. Although they involve money, that is not their primary purpose. These include bonus and point systems in loyalty programs as well as gambling applications.
  • Non-financial apps. These programs do not have anything to do with money. These services can include personal identification, polling and voting, file storage decentralization, and many other things.

dApps also generally fall under one of these two categories:

  • Anonymous dApps. Every participant in the dApps networks remains anonymous.
  • Reputation-based dApps. These dApps allow node operators to keep track of nodes in order to maintain trust.

How does DApps function?

DApps can be viewed and modified by anyone. dApps use the same technology that traditional internet-based applications to their front ends. They communicate with a back-end code that runs on the blockchain decentralize, which allows all transactions to be recorded. dApps use a crypto token to fuel these transactions. Lastly, dApps use a consensus algorithm to reach an agreement, and close a transaction. This could be Proof-of Work, Proof-of Stake, or other.

Examples of decentralized applications

Let’s now look at some examples of decentralised apps, once we have a better understanding of dApp and their workings.

Bitcoin dApps

While the Bitcoin blockchain is not as easy to create dApps as Ethereum, its popularity has led to some apps being built on it.

  • The Lightning Network was designed to solve Bitcoin’s scaling problem. It transfers transactions off-chain and increases the network’s throughput. The Lightning Network is an added structure to the Bitcoin blockchain. This structure allows users create payment channels within the Bitcoin blockchain. These channels can be established between two users. Transactions made through these channels will be quick and inexpensive.
  • Factom, a decentralised platform that uses the Bitcoin blockchain as an additional layer, is called Factom. It can store unlimited amounts of data that cannot easily be altered and also quickly confirm its authenticity. It can store documents, contracts, and apps. The US Department of Homeland Security is one of Factom’s users.

Ethereum dApps

Ethereum, unlike Bitcoin, was created to be a platform for decentralized applications. It also has Solidity, a programming language that was created to create smart contracts. This technology powers many modern dApps. Despite its scalability problems and strong competitors, Ethereum is still a popular choice for dApps creation.

  • Augur is a distributed platform built on Ethereum blockchain. It is intended to help create event prediction markets. To receive a reward, a user can place a wager on the outcome of an events. If they do come true, the least likely outcomes will result in more rewards.
  • Golem, a platform that is decentralized, provides the infrastructure needed to create a global marketplace for computing power. Golem allows users to buy and sell computing power around the world. Golem, an open-source supercomputer distributed across the globe that anyone can access, is called Open Source. It relies on the computing power of its users.

EOS dApps

EOS, a blockchain-based platform to develop dApps, is one of Ethereum’s rivals. It was initially built on Ethereum’s blockchain but later became its own platform. EOS is faster than Ethereum and has no transaction fees. EOS is not a decentralized platform. It’s managed by Block.one.

  • Everipedia is an open-source, universal Internet encyclopedia that provides free content based on wiki principles. Everipedia switched to EOS’s blockchain platform in August 2018. Everipedia was the first global decentralized encyclopedia, making it immune to censorship.

TRON dApps

TRON is a blockchain-based project that provides a decentralized environment to create and host digital entertainment content. The platform is a worldwide entertainment network that uses blockchain technology without the need for a central governing body.

  • One of the most well-known TRON gambling sites is TRON. It is essentially a decentralized online casino with the goal of becoming the largest TRON-based gambling platform.

Future of dApps

The number of decentralized applications is increasing rapidly at the moment. As of the writing of this article, 3,757 decentralized apps are available on stateofthedapps.com. The decentralized app industry is still in its early stages. We can only speculate at the moment on which industries dApps might have an impact:

  • Banking
  • Gambling
  • Real estate
  • Energie
  • Elections and voting
  • Social media
  • Internet of Things
  • Verification of identity
  • There are many other options.