Software applications known as “dApps,” or decentralized applications, are ones that run their backend code over a distributed computer network. Standard apps, which normally run on centralized servers, are in stark contrast to this. This gives dApps certain distinctive qualities and advantages over their centralized counterparts, along with other blockchain-driven advancements. However, dApps also have their fair share of disadvantages at this early stage of their development.
We’ll look more closely at what makes dApps unique in this post, as well as the advantages they offer and the difficulties they must surmount if they are to truly threaten the centralized approach. So,
What do dApps do?
With a general understanding of what decentralized apps are, we can go more into the characteristics of this rapidly expanding market. But first, it should be emphasized that decentralized applications have been around long before distributed ledger technology, and there have been platforms that have successfully used peer-to-peer networks, such as the original Napster and BitTorrent. However, the surge in popularity of Ethereum and blockchain technology, in general, helped to promote the term “dApp” as well as the idea behind it.
Why Ethereum, then? After all, blockchain technology predates Vitalik Buterin’s invention by quite a bit, and many blockchain protocols were already in use when Ethereum first appeared on the market. Smart contracts are the short answer, I suppose.
Ethereum was built to be a general-purpose blockchain capable of creating and supporting a wide range of applications, as we have already covered on these pages. In order to do so, Ethereum introduced a Turing-complete language called Solidity and made use of an antiquated idea derived from the design of vending machines. The adoption of smart contracts for blockchain applications gained popularity thanks to Ethereum. Ethereum has remained the top platform for smart contracts and, as a result, dApps even after the rise of several notable competitors.
Decentralized applications are dependent on smart contracts to function. The logic of these self-executing algorithms is what makes decentralized apps work. Given that it already adds some backend functionality to its original blockchain technology, a smart contract is effectively a dApp. You get something that resembles a traditional app but operates on a blockchain when you combine that with a user interface that can call the backend. Naturally, you may create numerous smart contracts to add more features and create apps with more complicated architectures.
What distinguishes centralized from decentralized applications?
The question of whether we really need dApps in the first place arises, given the prevalence of centralized apps and our familiarity with them. After all, the centralized model is operating satisfactorily and, in some ways, may even be superior to the decentralized strategy. And it’s true that there are several dApp development company issues that still need to be worked out in their current state. Although they are in the beginning phase of the development of dApps, they do have a few very major advantages that suggest their enormous potential. So let’s examine what dApps have to offer and how they compare to their centralized competitors.
One area where decentralized apps excel is in this. DLT-based applications, or dApps, are, by definition, incredibly secure. Blockchain-based or other distributed ledger technologies-based decentralized solutions do not have the single point of failure issue that centralized server-based systems do. Additionally, the strong consensus processes included in blockchain and DLTs make them extremely resistant to malevolent attacks. DLT systems’ immutability, or the fact that data saved on them cannot be altered or otherwise modified, is another significant benefit.
For the current generation of blockchain platforms and decentralized applications, this is one of the issues. It all results from blockchain technology’s constrained scalability, which means that most blockchain networks today struggle to process huge amounts of transaction data at once. This frequently causes network congestion, especially when dApp activity is high. One prominent instance was the 2017 debut of the digital collectibles game CryptoKitties, which quickly gained enormous popularity and clogged up the Ethereum network.
Additionally, employing a blockchain network results in increased expenses due to the scalability issue. Network congestion results in considerable cost increases for customers since they must pay more to have their transactions processed faster because executing transactions necessitates paying miner fees. Due to heavy network utilization, Ethereum in particular, has a lengthy history of experiencing escalating gas prices.
One of the blockchain community’s top concerns has been to find a solution to the scalability issue. Numerous Layer 2 scaling options for Ethereum already exist and are delivering positive results. The platform is also going through a significant change as it switches from proof-of-work to proof-of-stake and implements sharding. Both of these improvements are a part of the Ethereum 2.0 project and are intended to increase Ethereum’s scalability while reducing transaction costs and power usage.
Being open and permissionless, in contrast to centralized programs, is one of the dApps’ greatest advantages. There is no method to limit access to a specific dApp because decentralized public platforms like Ethereum are not under anyone’s control. Decentralized apps do not restrict content. Therefore this also means. When we take into account how dApps’ open nature will affect the sector’s development side, it becomes clear that this fact is much more important.
Developers can build on one other’s work and combine and recombine various components from multiple projects to create new kinds of applications and services because all dApps are fundamentally open source. This promotes creativity and enables the area to develop and expand in fascinating and frequently surprising ways.
What current DApp use cases are there?
The blockchain industry has already been home to many different types of decentralized apps, and developers are continuously looking for new ways to apply the technology. This is thanks to its ability to draw development talent and fuel innovation. The potential for dApps is already evident in a number of industries, including DeFi, enterprise solutions, gaming, digital collectibles, and others.
Financial independence (DeFi)
DeFi applications are, without a doubt, the most promising use case for dApps at the moment, sparking a market with a current value of over $40 billion. By offering new methods for borrowing and lending money and enabling the development of cutting-edge financial services like liquidity mining, the quickly expanding DeFi sector seeks to upend conventional finance.
Solutions based on blockchain technology have the capacity to upend a variety of industries and aid in the expansion and operational efficiency of businesses. Supply chain management, healthcare, and pharma are just a few of the industries where enterprise-grade dApps have already had an impact.
Digital collectibles and gaming
As was already mentioned, a game was the first dApp to experience great popularity. After the release of CryptoKitties, other related projects have attempted to duplicate that dApp’s initial popularity. Games like Decentraland and Gods Unchained demonstrate that there is still a sizable demand for gaming dApps even though none of these have been able to achieve quite the same level of popularity. Further demonstrating the potential of blockchain-powered digital collectibles is the current growth in non-fungible tokens.
Although blockchain technology is still in its infancy, there is already a compelling case for decentralized applications. Additionally, dApp development will expand as technology develops further, allowing for the development of new dApp categories as well as the creation of apps that are more complex. Decentralized apps appear to have a key role to play in our digital future, while it is unclear if they will be able to surpass traditional apps.