What are DApps?
DApps, or decentalized applications, have taken the digital world by storm. Let’s explore how this new technology differs from centralized models and how it might change the way we use the internet forever.
From sharing our daily thoughts on Twitter to conducting work meetings on Zoom, we use apps to run our lives every day. Most apps we use are centralized, which means they run on a computer system which is owned and operated by a single organization, usually the company that created them. This model makes sense from a developer’s perspective. You can run traffic, take cuts from transactions, and have access to userdata. From a user’s perspective, it’s less ideal for these same reasons.
Thankfully, there’s an alternative—DApps, or decentralized apps. Let’s explore what DApps are, where they came from, what their benefits are, and how they’re likely to shape the future of the internet.
What is a DApp?
The exact definition of a DApp is still a work in progress, but there are a few main criteria they meet:
- Any changes made to a DApp must be made by consensus of its users.
- DApps must have a consensus method to generate tokens (proof-of-work or proof-of-stake).
- DApps are open source, meaning that no organization owns the majority of tokens.
- Assets from a DApp are distributed to users as rewards.
- All data from a DApp is stored on a decentralized blockchain.
The Functionality of DApps
While cryptocurrencies and other more esoteric blockchain technologies are themselves DApps, the term DApps often refers to alternatives to centralized apps like the ones that inhabit your phone and desktop computer. Let’s compare the popular rideshare app Uber to a hypothetical alternative.
In an app like Uber, three parties are involved. A purchaser who needs a ride, a driver, and Uber themselves. The driver provides his services, the rider pays them, and Uber facilitates the exchange and ensures safe payment. But what if Uber was removed from the equation? If a rider and driver could use a decentralized network to find one another and had some way to ensure safe payment, Uber wouldn’t be needed as an intermediary. That hypothetical network would be a DApp.
DApps function like regular apps, but they run on blockchain technology. Users can find one another just as they would on a centralized app, but without a middleman, there’s nobody to take a cut or collect and sell their data. Blockchain technology allows this exchange to happen safely through the use of smart contracts written into their code.
What are smart contracts and how do they apply to DApps?
Smart contracts are essentially if-then statements with immutable rules written into a blockchain. These programs allow for safe, secure transactions between two parties without a third-party intermediary to facilitate and ensure the transaction.
Let’s return to the example of our hypothetical rideshare DApp. The driver doesn’t want to provide his service if there’s a risk of the rider not paying. The rider doesn’t want to risk paying and not receiving the service. In this case, a smart contract could be written into the DApp in which an agreed-upon transaction only occurs when the rider’s GPS pinpoints him in the exact place he needs to go.
This is only one very specific example. In reality, there are countless types of DApps that can and do exist, and an endless variety of smart contracts can be written to protect both parties in any scenario.
Pros of DApps
Using DApps provides a lot of advantages over centralized apps. A few of these include:
- Users can save money by avoiding third-party transaction fees.
- Without a centralized server, a DApp’s network can’t crash and can always be accessed.
- Userdata cannot be collected and sold by centralized powers.
Cons of DApps
DApps are still in their early stages, so they aren’t perfect. Developers are still working through the kinks. There are still some problems, including:
- Like all other apps, DApps need to grow to a sizable user base to function properly.
- DApps aren’t always easily accessible, and a certain amount of tech-savviness is required to wrap one’s head around the concept and do what’s needed to participate. This makes it hard to gain new users.
- Many DApps still run under proof-of-work validation systems, which have a negative environmental impact. Many people object to using them for this reason alone.
A Brief History of DApps
These days we define DApps almost exclusively through their relationship with blockchain technology, but they actually predate blockchains. P2P sharing networks like Limewire, Kazaa, and BitTorrent are (or were) all considered DApps. However, the security now offered through blockchains makes old models obsolete.
DApps continued their slow building popularity through the early days of cryptocurrencies, but they truly came into the spotlight after the advent of the Ethereum blockchain. This should come as no surprise. Since its foundation, making DApps easier to create has been at the forefront of Ethereum’s mission.
While the majority of DApps today are built using the Ethereum blockchain, network options are slowly diversifying as popularity and interest spreads. Now, blockchains like EOS, TRON, and NEO act as alternatives, and the numbers continue to grow.
The Future of DApps
DApps obviously have a lot of advantages, but as we’ve discussed, they have their drawbacks too. The good news is that many of these issues are being resolved as time goes on.
More and more networks are switching from a proof-of-work model to a proof-of-stake model, which greatly lessens environmental impact. Blockchain technology is also becoming less esoteric as a whole, and new users are attracted to using it all the time. This is partially due to a public narrative shift to include it, but developers are also making DApps and other blockchain-related technology easier to access.
Like with anything related to blockchain technology, the future of DApps is uncertain, but hopeful. We are still living in the pioneer days of DApps, so it shouldn’t surprise us that things start off shaky. But as more people see the value in decentralization, it will become more normalized. This is an exciting time. We look forward to seeing what happens next in the world of DApps.
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