What Are DApps?

What Are DApps?

Blockchain-based decentralized apps can do anything web or mobile apps can do, while maintaining privacy, keeping immutable records and bypassing middlemen.

From the user’s perspective, there is little difference between a decentralized app running on a blockchain and a traditional app running on the web or an operating system.

The main difference is that decentralized apps — DApps — run on distributed and immutable blockchain networks rather than a centrally controlled operating system. This makes them essentially impossible to censor.

In terms of what they can do, DApps run everything from games and marketplaces to decentralized finance (DeFi) lending platforms.

Under the hood, however, DApps generally share several basic characteristics that set them apart from their centralized kin.

First, DApps must be open source, meaning the code is available for anyone to see, and any updates and changes decided upon through a consensus mechanism that amounts to some form of majority vote rather than by a developer.

Second, DApps must (obviously) be decentralized. This means all data and records generated by the DApp are stored on an immutable, public blockchain.

Third, DApps are incentivized, generating and using tokens to reward validators.

By these definitions, Bitcoin itself qualifies as a DApp, albeit one with its own built-in blockchain.

Get Smart (Contracts)

That said, almost all DApps have smart contracts at their core. These are self-executing agreements with the terms between buyer and seller written into the code. Smart contracts are settled automatically when predetermined conditions are met, doing away with intermediaries that inject cost and risk into transactions.

More importantly, smart contracts are “trustless” — which in the blockchain/crypto world means that anonymous parties can trust the contract because they don’t need to trust each other to carry out a transaction. These can be relatively straightforward — trading one cryptocurrency for another or buying a piece of art on an NFT marketplace — or very complex.

The benefits DApps bring include zero downtime, as the smart contracts will be available on every node in the blockchain, and data integrity, thanks to blockchain’s immutable transaction record.

Created on 30th Jun 2021