In this article, we will explain what DApps are, how they work, and their main features. We will also cover the advantages and disadvantages they come with.
DApps – What Are They?
DApps are decentralized digital apps, and, in some ways, they work like normal apps. The main difference between them and centralized apps, though, is that they run on a blockchain or peer-to-peer (P2P) network of computers instead of a single computer. This means there is no central entity or authority to control them.
The concept of DApps was enabled by blockchain platforms that support smart contracts, with Ethereum being the first of them.
DApps combine a smart contract and a frontend user interface, with the frontend code and user interface being written in any language that can make calls to their backend. DApps can be decentralized because they are controlled by the logic that has been written into the smart contract and not by a company or individual.
Regarding their use cases, they can run everything from DeFi lending platforms to marketplaces, as we will see later in this article.
Under the hood, dApps generally share the following basic characteristics that set them apart from centralized apps.
- They are open-source, which means anyone can see their code, and changes and updates are decided upon through a consensus mechanism.
- All the data and records generated by a dApp are public and stored on a public, immutable blockchain.
- DApps are incentivized, as they generate and use a cryptographic token to help keep the network secure and reward validators.
DApps – Advantages
Considering these basic features, there are several benefits dApps come with:
- No downtime – With a dApp, there is 0 downtime since the smart contracts will be available on every node in the blockchain. Such an app will work even when an individual computer or a part of the network goes down.
- Data integrity – Since all data and records are stored on a public, immutable blockchain, malicious actors cannot forge data or transactions that have already been made public.
- Resistance to censorship – no single entity on the network can block users from reading data, deploying dApps, or submitting transactions.
- Privacy – Smart contracts can be written and executed privately, so you don’t need to provide real-world identity.
- Trust – All of the code is open-source, and anyone can see what the app does and how it does it. Smart contracts can thus be analyzed and are guaranteed to execute in predictable ways. This means anonymous parties trust the contract and there’s no need to trust a central authority.
DApps – Weaknesses
Despite the advantages just mentioned, dApps are not free of weaknesses. For example, a mistake in writing the contract cannot be reversed.
Furthermore, since they run on open-source smart contracts, they make it possible for malicious actors to probe the network in search of weaknesses. That’s why it is of utmost importance to carefully analyze the smart contracts and make sure they will be executed as intended.
Since they are still in their infancy, many of them have poor user interfaces, which directly affects the number of users. A low user number makes a dApp less interactive and even less secure, as a dApp’s security often relies on how many users it has.
Top DApps and DApp platforms
Given their advantages, dApps have a variety of use cases and can be created for totally different purposes and services, ranging from playing games to exchanging tokens.
The most popular blockchain platforms for building dApps today are Ethereum, EOS, NEO, and Tron. There are currently thousands of dApps out there, offering a variety of functions. Some of the most popular categories of dApps include:
- Games, such as My Crypto Heroes, EOS Knights, Dark Forest, and the IOI game.
- Decentralized Exchanges (DEXs), such as UniSwap and 1inch;
- Marketplaces, including OpenSea, Ocean Market, and Decentraland Marketplace;
- Gambling, such as Etheroll.
To sum up, dApps are apps or programs that run on a peer-to-peer (P2P) network or blockchain. They are not owned or managed by a central authority and can be applied to various online industries, including DEXs, gaming platforms, and advertising networks.
Even if they do have a few downsides, such as a difficult Know Your Customer (KYC) process and maintenance, DApps ensure data integrity, speed, privacy, and can be more financially efficient.