Today, it seems like the whole world is hell-bent on decentralizing everything. From crypto to the metaverse, the concept of decentralization is now deeply entrenched in the tech universe. Dapps or decentralized apps are of special interest in 2022. According to statistics, there are currently around 3 907 dApps with 182.34k daily users. So, it has transgressed the hyped state and become a world-known trend.
With that said, let’s see what those dApps are and how they help us discover the possibilities of the Ethereum, Hive, Klaytn, and NEO blockchains.
So what is a dApp? Decentralized applications (dApps) are a class of software that utilizes blockchain-based distributed ledgers to create an application that is not controlled by any single entity. While these systems can be used for many types of programs, they’re most frequently used to create decentralized peer-to-peer marketplaces – think AirBnB and Uber without the central authority.
The main characteristics of dApps include the following:
The Ethereum platform is considered to be the original ground zero for decentralized applications since it provides the most widely used tools for dApp building and runs regular ‘hackathon’ events to promote new decentralized applications.
A typical dApp consists of two parts just like any other mobile application. It uses the same front-end code as conventional software to render a web page (HTML, mostly). However, its back-end is what differs dApps from traditional applications. The backend runs on a decentralized P2P network, thus freeing it of a centralized control entity.
Moreover, traditional applications use databases to store data in a secure place. On the contrary, a decentralized application is backed by a smart contract stored on a blockchain. Again, Ethereum is the most known blockchain for running smart contracts.
A smart contract is a self-executing program that runs on the Ethereum blockchain nodes when the pre-defined conditions are met. And that adds greatly to the decentralized nature of dApps since dApps are controlled by the logic embedded into the contract, instead of an exclusive one-entity access.
Finally, tokens are used to add records or transactions into the nodes, which are mined or distributed using various algorithms/protocols. Currently, the most popular protocols are PoW or PoS. They are used to reach a consensus or agreement between all users of that particular dApp.
Just like other decentralized technologies, dApps obtain a unique disruptive position thanks to their open-source nature and decentralized design that eliminates any sort of central authority to regulate or manipulate the system.
With this comes great power and other differentiators that make businesses invest into this kind of software.
However, along with increased privacy and less development hassle, some challenges lie ahead for dApp developers:
Now that you’re aware of the potential boons and roadblocks, let’s see which business cases augur well for decentralized solutions.
DApps are usually cited as a crypto-friendly option, but their application areas are much wider. Let’s take Auctionity as an example. Smart contracts make online auctions as transparent as possible by automatically recording the time and size of bids, removing the possibility of manipulation.
With that said, let’s go over some other popular applications that diversify the ecosystem.
A decentralized exchange or DEx is an exchange market that holds customer funds without relying on an external service or controlling entity. Instead, users can trade directly (peer to peer) through an automated process. This system is completely different from centralized exchanges, where the exchange service holds both the user’s funds and their own in a central location, allowing customers to trade directly with the company rather than with each other.
Essentially, DEXs are a type of decentralized application that facilitates liquidity to the automated market makers and smooth transactions throughout. Moreover, thanks to the decentralized nature, DEXs do not require any KYC information or a centralized authority like Binance to approve the transactions. Also, these dApps are much faster than CEXs (centralized exchanges), allowing users to trade tokens in mere minutes.
Social connections can also take the form of decentralized applications. Numerous dApps like Steemit and PeePeth have already proven to be on par or even beat traditional platforms. For social media, decentralization promotes a new approach to protect data privacy and amplify content regulation. In this case, dApps platforms also reward you with tokens for participating in the network and contributing valuable content.
Decentralized applications powered by the Ethereum blockchain also offer solutions to many of the issues that arise in today’s gaming industry. For dApps, there are no centralized servers or third-party systems to maintain; everything is under your control. Thus, non-fungible tokens (NFTs) are used in popular game DApps like Axie Infinity, Splinterlands, and My Defi Pet to ensure that players keep the value they make in the metaverse. Also, it means that gamers get the ability to own digital assets and use them across games so that they don’t have to worry about losing their items, and can always use them in other blockchain-powered games.
DApps are an unprecedented technology that is still yet to be leveraged in full. According to Blockchain Examiner, the dApps market size is set to hit over $21 million by the end of 2025. The steadfast growth is ensured by the proliferation of blockchain technology and more affordable platforms along with Ethereum. Therefore, if you’re looking for an easier and more cost-effective way to build your own dApp, there has never been a better time to do that.
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