Decentralized applications (dApp) are digital programs that execute on peer-to-peer (P2P) or blockchain networks of computers as opposed to a single computer. In this TokenMason article, we define what dApps are, how they are created and the purpose they aim to provide. DApps are outside the jurisdiction of any governing authorities. DApps built on Cardano, Ethereum or Polygon are developed for a variety of purposes for peer-to-peer transactions in sectors such as retail, healthcare, finance, technology and gaming.
Understanding Decentralized Applications (dApps)
A regular web app, such as an Uber or Twitter app will execute on a computer system that is operated and owned by an organization, giving it complete authority over the app and its mechanisms. There may be multiple users on one side, although the backend is usually managed by a single organization.
Early instances of dApps run on P2P network. For example, BitTorrent, Napster and Tor, which are applications run on computers connected via a P2P network, where users are either feeding (receiving data packets) or seeding content (sending date packets) or concurrently performing both functions.
In the cryptocurrency space, dApps run on a blockchain network in an open-source, public or decentralized environment and are absent from control and interference by a single authority. For example, a developer can create a Facebook-like dApp and put it on a blockchain where any user can publish messages or update a status. Once posted, no one can alter or delete the message.
Similarly in the crypto space, these same dApps are run on the blockchain in a decentralized environment which unlike the legacy dApps, free from external oversite. For example, a developer can create a Facebook-like dApp and put it on a blockchain where any user can publish messages or update a status. Once posted, no one including the app creators and management team can moderate the messages.
Advantages of dApps
Most of the advantages of dApps focus on the program’s ability to safeguard user privacy and this contrasts with decentralized apps as customers do not need to submit their private or personal information to use the dApps. This anonymity is on of the key advantages and increase uptake. For example, those in third world countries or unbanked may not have access to official identification documents and are prevented from engaging with the legacy applications.
Disadvantages of dApps
As previously mentioned, advocates of free speech highlight that dApps can be created an alternative to existing social media platforms. A decentralized social media platform would be resilient to censorship because no single individual on the blockchain can delete messages and block messages from being posted. This would be especially advantageous during times of political unrest, wars or natural disasters.
Ethereum is the most popular and adaptable platform for creating new dApps, providing the infrastructure required for developers to focus their efforts on finding pioneering uses for digital applications. This could enable fast deployment of dApps in an array of industries including finance, gaming, banking, social media and online shopping.
The use of dApps is still in the initial stages and therefore susceptible to certain problems, many of which are not yet experienced. There are questions as to whether the dApps will be able to scale efficiently, especially if there is a surge in users which would require significant computations and ultimately overload the network, causing congestion.
One of the key issues is the development of a user-friendly interface. Most legacy apps are developed and fine whilst adhering to modern day UX standards and adopt an ease-of-use aspect that encourages the new user to explore and interact with the app. To ensure a dApps success, developers must equally allocate their resources into ensuring this aspect is satisfied to create a similar environment to the existing programs. However, these issues can be worked on and modified with different iterations of dApps in the near future.
Code modifications and updates are another limitation of dApps. Once implemented, a dApp will likely need continuing changes for the purpose to correct bugs or making enhancements and mitigating security risks. According to Ethereum, it can be difficult for developers to make required updates to dApps because the code and date distributed to the blockchain are challenging to modify.
Differences Between Centralized and Decentralized Apps?
A centralized application such as Facebook, Twitter or PayPal is owned by a single company and they therefore hold or the data, IP and software. As a user, you will be able to interact with the app by downloading, an then continuously sending and receiving date via the company’s server,
Contrastingly, a decentralized app functions on a peer-to-peer or blockchain network of computers. It permits users to engage in transactions directly with each other as opposed to relying on any central governing authority. Users of dApps will pay the developer a quantity of cryptocurrency to download and utilize the program’s source code. This source code incorporates a smart contract, (click here to learn more about smart contracts), which allow users to complete transactions without the need to share personal information.
What Are Examples of Centralized and Decentralized Apps?
Decentralised app such as Mastodon provide a similar function to twitter. Other dApps include Cryptokitties which is a popular game that allows users to breed, buy and sell virtual cats. MakerDAO is a decentralized financing and credit service supporting the stablecoin (click here to learn more about stablecoins), Dai that allows users to open up a collateralized debt position (CDP).
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We hope you have found this blog useful and learned more about dApps. Please visit our Blog page for more blockchain related news and articles. For example, you may be interested to read our article about Decentralised Exchanges (DEX).
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