Published on Aug 18, 2021

Diving into the World of Dapps: A Beginner's Guide

Sidharth
#Learn
icon-alt6 Min
Diving into the World of Dapps: A Beginner's Guide

The rise of decentralized technologies and blockchain networks has given rise to a new era of digital applications that are changing the way people interact with technology. With the advent of dapps, users now have access to applications that offer greater security, transparency, and freedom from centralized control. As a result, dapps have the potential to disrupt traditional business models and change the way we interact with technology and with each other.

In this blog, we will provide a comprehensive overview of dapps, including their characteristics, how they work, the benefits they offer, and the challenges they face.

What does Dapp mean? Definition of a Dapp

Dapps are similar to an Android or an app store application that we frequently use on our smartphones. The only significant difference between an App and a Dapp is, Apps require a centralized system to control their entire functioning while Dapps do not.

Decentralized applications (Dapps) are a novel type of digital application that operate on blockchain networks. Unlike traditional apps that are centralized and run on central servers, dApps are designed to operate on a decentralized network. This enhances their security, transparency, and resists censorship and control by any single entity.

Characteristics of Dapps

  1. Decentralization: One of the key characteristics of Dapps is their decentralization. Unlike traditional applications, which are typically owned and controlled by a single entity, Dapps are built to be distributed and run on a decentralized network. This means that there is no single point of control or ownership, and the application can be run and maintained by a large community of users and developers.
  2. Open Source: Another key characteristic of Dapps is their open-source nature. Most dapps are built on open-source blockchain platforms, and their source code is freely available for anyone to inspect, use, and contribute to. This makes dapps highly transparent and ensures that they are not controlled by any single entity.
  3. Incentivization: Many dapps are built with incentivization in mind, meaning that users are incentivized to participate and contribute to the network. This can be done through the use of token-based rewards systems, where users are rewarded for their contributions to the network. This incentivization mechanism helps to ensure the sustainability of dapps and encourages a large and active community of users and developers.
  4. Consensus Mechanism: Finally, dapps are built with a consensus mechanism in place to ensure the security and integrity of the network. This mechanism allows the network to reach a consensus on the state of the application, and ensures that all users have a clear understanding of the state of the application at any given time.

Some Examples of Dapps

  • **Uniswap** - A decentralized finance protocol created to exchange cryptocurrencies using smart contracts. Uniswap helps to automate the transaction process by issuing cryptocurrency tokens.
  • Augur - Augur is a decentralized app that helps traders get their trades right by forecasting better predictions for trading gains.
  • Axie Infinity - An online game created on cutting-edge blockchain technology using non-fungible tokens and Ethereum cryptocurrency. Currently the most popular decentralized gaming collection.
  • **Decentraland** - Decentraland is a 3D virtual reality platform based on the Ethereum blockchain, which helps users purchase virtual land and build virtual reality applications. It also supports monetizing those applications.
  • Matcha - Matcha is a crypto trading platform that helps you find different exchange prices across the crypto network and assemble the most competitive prices in one trade.

What are Dapps used for?

Decentralized applications or dApps are used for various purposes, such as for financial transactions, online voting, supply chain management, gaming, social media, and more. To give an example, let's take the case of social media. Traditional social media platforms like Facebook and Twitter are centralized, meaning that they operate from a central server controlled by the company. The content posted on these platforms is also stored on their servers, giving them complete control over the user data.

However, with dApps, social media can be decentralized, where users own their data and can control how it is used. In this scenario, there is no single entity or company that controls the platform. Instead, the platform operates on a decentralized network, where users can interact directly with each other without intermediaries. This results in a more transparent and secure social media experience that gives users more control over their data and privacy.

The purpose of Dapps will keep changing and advancing according to time, but the core principle of keeping them distributed, decentralized, and immutable will be intact.

In the near future, there will be various Dapps that will serve as a viable alternative to today's trending and valuable apps.

Types of Dapps

  1. Finance: Financial dapps aim to disrupt traditional financial systems and provide users with new financial services and opportunities. This includes decentralized exchanges (DEXs), lending platforms, and stablecoins, among others. Financial dApps are built on blockchain networks, which provide users with greater security, transparency, and freedom from traditional financial institutions.
  2. Gaming: Gaming dapps provide users with new gaming experiences and opportunities. These applications are built on blockchain networks, which provide users with new ways to monetize their gaming experiences, and offer new gaming opportunities that are not possible with traditional gaming platforms.
  3. Social Networking: Social networking dapps aim to provide users with new ways to interact and connect with each other. These applications are built on blockchain networks, which provide users with greater privacy and security, and allow users to interact with each other without the need for a centralized intermediary. Some popular social networking dapps include decentralized social media platforms and forums.
  4. Supply Chain: Supply chain dapps aim to improve the transparency and efficiency of supply chains. These applications are built on blockchain networks, which provide users with real-time visibility into the state of their supply chains and allow for greater transparency and accountability throughout the supply chain.

How do Dapps work?

Dapps are quite recent in the technological world. Their applications are still limited to the Decentralized Financial (DeiFi) segment. Nevertheless, they are expanding to more and more industries where transparency and privacy are of the utmost importance.

Here is a typical DAPP working process:

  • A Dapp runs on back-end code which is typically a smart contract.
  • This digital treaty helps the Dapp to take performative actions according to the rules implied in the smart contract.
  • If the smart contract requirements are met, a transaction takes place between a P2P network which is recorded, stored, and distributed permanently on a public ledger.
  • The distributed public ledger restricts its modification with its unique cryptographic hash function that makes the dapps indestructible and irreversible.
  • If the target is not met, the transaction neutralizes and returns to its initial state.

To simplify it further, here are the vitals for a Dapp to work:

  1. Blockchain Technology: Dapps are built and run on decentralized blockchain networks. The blockchain is a distributed ledger that keeps a record of all transactions and data on the network. This allows for the creation of a tamper-proof and transparent record of all transactions and data on the network.
  2. Smart Contracts: dapps are powered by smart contracts, which are self-executing contracts with the terms of the agreement directly written into code. Smart contracts are used to automate the execution of the dApp's functions, and they ensure that all transactions and interactions on the network are secure, transparent, and tamper-proof.
  3. Interaction between dapps and Users: dapps interact with users through their front-end user interface, which is typically built using HTML, CSS, and JavaScript. The front-end communicates with the back-end blockchain network through APIs, allowing users to interact with the dApp and make transactions on the network.

Benefits of Dapp development

Dapps are packed with multiple benefits that traditional apps fail to provide. Some of the most popular benefits of developing a Dapp, both for a user and the consumer, are:

  • Censorship Free: Since Dapps are distributed, no one entity controls or dominates them. A Dapp is developed by a developer and managed by the community of users.
  • Minimum Downtime: The public ledger is distributed globally and sources computational power through global computers, constantly up and working. It minimizes the downtime of a Dapp compared to an app that is located in a centralized data center.
  • Open Source: Dapps are accessible to all. Their open-source code makes them easily available to anyone on the platform. Developers can apply existing smart contracts to their Dapps. These instill top-of-the-line security with zero margins of error.
  • Operates autonomously: Once a DAPP is set in motion, it runs independently without external tampering or third-party involvement.
  • No single entity: Dapps are a chain of autonomous networks. Hence they do not depend on hierarchical entities to make decisions or change conditions. They rely on “If and Then” mechanisms that do not require external suggestions.

Note:

**You can explore Dapps at **https://thedapplist.com/

Join the Communitynorth_east
pattern-left
pattern-right

Subscribe to receive Alpha!

Join 4.3k subscribers from renowned companies worldwide and get a weekly update in your inbox. Stay updated on the latest and finest projects and product updates.