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Most of the apps you use nowadays run on centralized networks i.e they are controlled by a single authority. For example, social media networks, banks, and streaming services hold all of your data on centralized servers.
When you access any of these apps, a request is sent to the server and you get a response back. Suppose you entered your credentials details to login into that system as a request and the response comes in form of access to the website or not(in case of invalid credentials).
As you can see, all of your data like credentials, etc are stored in one place. While this centralization is efficient, it generates a huge amount of data. And that means it leads to unwanted exposure to hacks, etc.
It also leads to Big Tech companies like Google or Amazon profiting off your data. These drawbacks have raised data security awareness, leading to people becoming more interested in privacy-preserving solutions like blockchain technology.
Apps built on blockchain technology that address these issues are known as DApps or decentralized applications.
i.e
DApps are any computer applications whose operation is maintained by a distributed network of computer nodes, as opposed to a single server.
Let us understand what DApps are, how they work and some of the challenges these new types of applications face.
What are DApps?
DApps stand for decentralized applications and are applications that run on the blockchain or peer-to-peer computer instead of a single computer.
The concept of decentralized application was enabled by blockchain platforms that support smart contracts, like Ethereum.
Ethereum supports Ethereum virtual machine (EVM) which can be described as a distributed computer whose state at any given moment is defined via consensus.
As a result of the way they are executed, DApps can provide the same quality of service that regular apps are capable of, while at the same time enjoying full advantages of decentralization, such as almost constant uptime and resistance to censorship and corruption.
Examples of DApps
🔸PancakeSwap
🔸Axie Infinity
🔸Katana
🔸Uniswap
🔸Bomb crypto
etc.
Features of Dapps
- They are decentralized i.e they are free from control and interference to a single authority.
- No single point of failure because the network span multiple nodes.
- Open source
- They are more secure
- They are censorship resistant
- Development is flexible
Challenges of Dapps
- Difficult to scale
- Challenges in developing a user interface.
- Difficult in making code modifications.
Example - Suppose you want to send some ether to your friend -
With DApps, you would simply log in to your crypto wallet, select the amount you want to send, and confirm the transaction. A smart contract takes over to complete the exchange.
At the same time, blockchain validators work together to verify your transaction, generating a payment record on the blockchain.
With web2, by contrast, the process of sending US dollars to your friend occurs on a centralized network. That is, a bank handles every component of your transaction. They own the data, and they decide if the transaction is valid or not.
Utility tokens in DApps
Many DApps integrate a utility token that guides platform economics. For example, many utility tokens enable DApp governance, in-app transactions, and reward programs, among other use cases.
Types of DApps
Depending on the use case and protocol layer, DApps can be classified into three categories.
🔸Type1
🔸Type2
🔸Type3
Type 1 DApp
These DApps have their own blockchain network.
Example - Bitcoin, The macOS Monterey Operating System on your Mac
Type 2 DApp
These DApps leverage Type 1 DApps and integrate a utility token necessary for them to function.
Example - The Brave browser application on your Mac
Type 3 DApp
These DApps utilize the protocol of a Type 2 DApp to function.
Example - The Honey plugin that runs within the Brave browser application on your Mac.
What are DApps used for?
DApps serve as a bridge between the current web 2.0 systems and web3, the decentralized web of the future.
DApps are accessible through conventional web browsers like Chrome but they communicate with underlying blockchain networks using smart contracts
i.e
DApps look familiar on the front end, the back end exists on a decentralized database instead of a centralized server
DApps and crypto wallets
Within the decentralized ecosystem, crypto wallet DApps are crucial. Crypto wallets are necessary to buy, sell, and trade cryptocurrencies and can be custodial or non-custodial.
Custodial wallets, such as those on centralized crypto exchanges (CEXs), are custodial because the platform holds your private keys, the equivalent of your account PIN. Non-custodial wallets are under your control, meaning no one else has access to your private keys.
DApps and decentralized exchanges
Users often access these DApps using a web browser. After navigating to the DEX web address (URL), you’ll see an interface that allows you to connect a crypto wallet.
Once this is complete, you can start interacting with the DEX DApp, participating in supported functions like liquidity pools, lotteries, NFT marketplaces, and more
DApps and social media
Similar to social media platforms like Facebook and Instagram, social media DApps like Steemit facilitate online connection. However, social media DApps reverse the flow of value and reward you for participating in the network instead of storing your data
DApps and Games
Decentralized gaming is one of the most popular segments of the blockchain ecosystem. Popular gaming DApps like Axie Infinity, Splinterlands, and My DeFi Pet integrate non-fungible tokens (NFTs) to ensure users retain the value they generate in the metaverse.
Summary
DApps are built on decentralized networks, while traditional apps live on centralized networks.
These DApps play a crucial role in bridging the current Web 2.0 experience and web3 functionality.
Conclusion
This is the end of the blog.
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