What Are Decentralized Applications (dApps)?

What Are Decentralized Applications (dApps)?

Decentralization is the core characteristic of the cryptocurrency space, and with no limitation to exploring blockchain technology, more innovation and development will continue to utilize the revolutionary technology.

The amount of information and human interaction has increased dramatically since the invention of the internet. Sadly, all of these user data and privacy are being managed and controlled by a central authority, putting users at a disadvantage; they can sell your information or remove your access to their platform altogether.

However, users can enjoy total freedom from central authority by decentralizing resources and servers through the blockchain protocol. As a result, the blockchain’s growth has also transformed the development paradigms of applications, with the emergence of decentralized applications, dApps.

What are dApps?

dApps is an acronym derived from Decentralized Application. This means that dApps are applications that use Blockchain technology to operate in a decentralized way. dApps is a form of application that runs without using control points or central servers; instead, they rely on a decentralized feature of the blockchain network.

dApps are built on a smart contract and a front-end user interface, written in a language their back-end can understand. They are decentralized because they are controlled by rules written in smart contracts rather than by firms or individuals.

Unlike conventional applications you download on your smart devices, dApps are not hosted on a centralized platform such as the Appstore or Play Store. Instead, the front-end of dApps is often housed on a decentralized storage platform, while the back-end code is operated on a decentralized peer-to-peer network.

dApps fix a fundamental problem with conventional applications, which is a vulnerability in the personal information of users who use the application, as it is controlled by the central authority behind the application development.

How Does dApps Work?

A dApps operates in the same way that a blockchain network does. Each dApps user is a node in the network. Each user is responsible for the network’s usage and operations.

To understand how dApps work, it is necessary to first demonstrate how a traditional application works. The front-end and the back-end determine traditional application usability. These apps interface with devices and servers using software hosted on centralized web servers and the Hypertext Transfer Protocol (HTTP). As a result, the centralized server has complete control over users’ data and privacy. This means once the data is submitted to the centralized application server, the user loses all ownership of it.

Contrarily, dApps have no central authority and are powered by back-end code, which is typically a smart contract. A dApp is essentially an open-source software powered by tokens generated through a protocol representing the reference blockchain. This digital agreement of the protocol enables the dApps to undertake actions following the rules outlined in the smart contract. If the smart contract conditions are completed, a transaction occurs between a peer-to-peer (P2P) network that is permanently recorded, saved, and disseminated on a public ledger. The distributed public ledger’s unique cryptographic hash algorithm prevents transactions from being manipulated, making dApps indestructible and irreversible.

Because it is decentralized, everyone can observe and contribute to the code’s development. This considerably accelerates the process of scalability for product creation in terms of quality and quantity.

Features of dApps

Open Source

One critical feature of dApps that adheres to the concepts of transparency and decentralization is that their code is accessible; anyone can access the programming behind the application. The availability of the source code ensures a high level of program transparency. This is because the community can always see what the dApps are doing. It also provides for community audits and the possibility of proposing changes to the source code, contributing to the platform’s improvement. All dApps make their source code available to the public, smart contracts, and the application components.

Blockchain Execution

dApps are defined by smart contracts, which automatically register, confirm, and perform data operations without human intervention. To increase transparency and security, this data is encrypted and kept. These acts are visible to the public on the blockchain block explorer. Furthermore, because dApps use a blockchain consensus method (Proof-of-Work (PoW) or Proof-of-Stake (PoS) or other desired consensus mechanism.) to validate interaction, they share the blockchain network’s high level of security.

Decentralization

dApps are decentralized since they are built on blockchain. This means that there are no enormous data centers or servers holding information in high-tech applications. Because everything is saved in the blockchain, it is more difficult for dApps to go offline owing to system instability or casualties occurring in data center rooms.

Types of dApps

Although all dApps operate similarly, we can divide them into three types based on their specific use case and protocol layer.

Type-1 dApps

Type-1 dApps exist independently on their own blockchain. The most popular applications use this sort of dApps, such as Bitcoin.

Type-2 dApps

Type-2 dApps are developed on top of type-1 by leveraging the capability and features of the underlying blockchain. Tokens are used for interactions in these protocols, and transactions may be processed on the type-2 before being executed on the type-1, taking off some of the strain on the main chain.

Type-3 dApps

Type-3 dApps are built on type-2 and frequently contain the information needed for the other two to interact. It may keep the application programming interfaces (APIs) and scripts required for type-1 and type-2 to function. A type-3 dApps protocol may house many type-2 dApps, enhancing the user experience.

Benefits of dApps

  • User privacy: Because smart contracts may be designed and performed privately, you do not have to reveal your identity.
  • Data integrity: All data and records are stored in a public and irreversible blockchain, making it impossible for attackers to modify data or transactions that have already been made public.
  • No Downtime: Because smart contracts are available on every node on the blockchain, there is no downtime. Even when a glitch or a portion of the network fails, the dApps still function.
  • Resistance to censorship: Once the dApp is put to the blockchain, removing or changing it will be incredibly difficult because community agreement is continually required. When data is carried out on the blockchain, it is kept permanently. This makes dApps tough to regulate.

Disadvantages of dApps

  • Poor User Interface/Experience: As the technology is still in its infancy, it is challenging to use even for those familiar with it. Suppose a user executes an incorrect transaction on the dApp. In that case, there are limited options as a margin for error is not available, and the error will cause significant harm to the user.
  • Expensive to use: A network transaction fee must be paid to carry out a transaction on dApps. This transaction fee is paid directly to the miners that operate the blockchain network on which the dApp runs.
  • Delay in a transaction: dApps are considerably slower than standard apps. This is because blockchain employs the Proof-of-Work consensus mechanism and takes time to settle transactions and mine new blocks.
  • Self-responsibility: Another disadvantage of dApps is that the responsibility is entirely on the user. Unlike conventional apps with help desk provision, there is no one to contact when there are issues.

Final Takeaway

dApp is a blockchain-based application that must go through a central server, unlike traditional applications. Interestingly, dApps are not subject to copyrights, trademarks, patents, etc., allowing collaborative innovation and benefits from individual accomplishments in a space where the entire space is dependent on the Work of others.

Ensure to check the CCTIP Blog daily for articles that help you understand cryptocurrency and blockchain technology tenets. Join us on telegram for more information.

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