Beginner_s guide to decentralized applications _Dapps_

Decentralized Applications (DApps) are applications running on a distributed computing system, i.e., on the blockchain network. Although DApps can be defined in various ways, they are typically open-source, secure, and decentralized applications.

There are several DApps with use cases, including social media platforms, cryptocurrency wallets, financial applications, and gaming. They function by using a token system as a proof of value. Each token is assigned to a particular dApps or is native to a blockchain that hosts a dApp.

dApp are open source projects that are founded on a blockchain network. The network is transparent, decentralized, and fool-proof to attacks.



The emergence of Bitcoin and its blockchain generated a chain reaction of technological development in blockchain protocols. Developers and investors worked tirelessly in refining, modifying, and improving blockchain protocols. They tailored these modifications to several use cases.

The first blockchain was introduced several years ago. Today, we have a wide range of modified applications of blockchain to solve issues in web browsing, finance, gaming, and even art.

Some might ask, how has blockchain been modified to fit all of these use cases? The answer is simple - dApps. dApps (Decentralized applications) are very similar to the conventional traditional applications that run on blockchain networks rather than central servers. In simple terms, dApps is an application running on a decentralized network. This means they are not managed or owned by any central or third-party authority. Hence, it is decentralized.

dApps have grown in leaps and bounds from its meager number of 25 dApps in 2015 to over 3600 in several fields, including finance, social media, games, etc. Furthermore, it was recorded that dApps account for 182,5 billion worth of user transactions each year on blockchains. This proves, without question, the significance of dApps in blockchains.

How DApps Works

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The systematic operation of dApps functions on the basic structure of the frontend and a backend. The frontend majors on enhancing effective communication with the user while the backend deals with the smart contract that runs the transaction. The smart contract is what the blockchain (prominently the Ethereum blockchain) recognizes and gives answers to.

In more technical terms, the front end of dApp is where the results of the codes are executed. It is the chain that joins the user's interaction with the application. Also, the front end has a digital wallet that is suitable for several functions.

The digital wallet holds a record of public and private keys to doubly authorize the users. The wallet also helps the users manage their blockchain addresses and cryptographic keys and allows them to interact with their funds. It also helps to trigger the execution of smart contracts.

The backend of dApps is a different ball game entirely as it brings a twist to using the smart contracts on the server-side of the application. The dApps backend is open source, meaning that it can be modified by anyone that has access to it. It is the part of the application that executes the instructions. On the other hand, smart contracts have a specific function, and they carry out irrespective of any external factors.

Differences between Decentralized Apps and Traditional Apps

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Loom and Zoom are common examples of companies that offer web applications to their users. These traditional web applications are built on the structure of the frontend and backend elements. However, they take a twist by leveraging software in the centralized web servers rather than the local OS of devices. These devices then leverage the HTTP - Hypertext transfer protocol for encrypting messages for communication with servers. Hence, the frontend feed of traditional web applications is based on the data from the backend or the company's web server.

On the other hand, a decentralized application uses a smart contract on the foundational blockchain network as its backend. A blockchain is a network of nodes sharing the same information and linked together like a chain.

DApps use the same technology to render the page on the front. However, while dApps utilize wallets to connect to relevant blockchain networks, they differ from web applications in their backend.

Significance of Wallets in Decentralized Applications

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You might be wondering, what are dApps used for? To understand that, you have to know what wallets are significant to the functionality of dApps.

The digital wallets help manage the blockchain address and cryptographic keys of users. These keys are needed for their authentication and identification. Rather than using HTTP protocols like traditional web applications, the wallet triggers the smart contract or, better still, the backend of the dApps. The smart contracts, in turn, interact with the blockchain network and ensure that the transactions are executed.

It is a good plus to know that smart contracts are programmable. This means they can be altered and modified to solve a particular problem. Thus, dApps can be used in several use-cases.

Key Features of Decentralized Applications

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Another important aspect of discussions around 'what is a dApp' is the outline of the key features. Now that you know how decentralized apps work, you have a good impression of the basics. In light of this, we should examine the dApp features that make them unique.



Open Source

This is one of the major highlights of dApps. dApps is open-source; thus, it is not under the ownership or control of any single entity. Therefore, the code is readily available for assessment and modification.



Incentives

Token generation is the next critical element of a dApp. In addition to distributing native tokens as rewards, decentralized apps need to generate native tokens to provide proof of value.

Decentralization

According to their name, decentralized applications run on a decentralized blockchain, which makes them different from traditional applications. As a result of the dApp blockchain association, all operational data of the app must be stored on a blockchain.

Protocol Compliance

It is important to express all stakeholders' agreement to use cryptographic algorithms to verify the value of a decentralized application.

Advantages of Decentralized Apps

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Various insights regarding their definition, design and functionality emerged from the primary understanding of a dApp. The decentralized application is simply a traditional web application run on a blockchain network. What is the value that a dApp offers to users? Below are some of the benefits of decentralized applications.

No Downtime

One of the key advantages of dApps is that it is always available. As soon as the smart contract is deployed on the blockchain, it can always be accessed by clients who need to interact with it. Also, by using dApps, malicious actors will not be able to launch denial-of-service attacks against specific applications.Due to a peer-to-peer architecture, decentralized applications can work even if parts of the network architecture do not function.

Censorship Resistance

In decentralized apps, no single actor controls the data and processes. Hence, governments or entities cannot impede users from submitting transactions, deploying dApps, or accessing blockchain data. dApps have the advantage of being completely independent of any organization or individual.

Trustless Computation

An additional critical value advantage of blockchain and dApp interplay is the analysis of smart contracts and the predictability without any centralized authority. Compared to traditional models, decentralized apps provide the foundation for truly trustless systems.

You must trust the financial institutions that offer online banking and assume that they will not misuse your financial information. DApps, on the other hand, do not need a central authority anymore as smart contracts handle everything.

Privacy

It is clear that anonymity is the most dominant characteristic of decentralized apps, which solidifies the understanding of 'what is a dApp.' It would be no surprise that a large share of decentralized apps does not need users to provide their real identities. Using their Ethereum login credentials and a digital wallet, users can access dApps rather than complete a complicated and lengthy signup process.

Data Integrity

Decentralized applications use cryptography to ensure that data is securely stored on blockchain networks. In addition, the availability of a public blockchain to verify transactions ensures the reliability of data records as well.

Risks with Decentralized Applications

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There is a sharp contrast in protocol, consensus, and applications. For dApps, there is an amazing blockchain relationship that provides a promising future for digital transformation. However, certain notable risks are associated with using decentralized applications. Here are a few of them:

Maintenance

In light of the difficulty of updating the blockchain network's code and data, decentralized applications present several maintenance complications. For example, developers could not deploy updates even when bugs or security risks were detected.

Network Congestion

If one dApp consumes excessive computational resources, the issue of network congestion becomes apparent. Currently, the Ethereum network can process between 10 and 15 transactions a second. Nevertheless, sending transactions faster might cause the number of unconfirmed transactions to increase more rapidly.

Centralization

A decentralized application might resemble one built on Ethereum, but it may still have some characteristics of a centralized application. For example, the key or sensitive data can be stored on the server-side in some dApps, or the logic could be performed on centralized servers in others.

Performance Overhead

Next, there is a major issue of performance overhead and scalability related to dApp examples. To ensure the desired security, reliability, integrity, and transparency in a dApp, each node in the network has to run and store every transaction. In addition, the proof-of-work consensus mechanisms consume resources and time. Thus, dApps are much larger than the standard computation.

User Experience

The difficult task of creating user-friendly engineering experiences is another significant drawback of decentralized applications.In addition, most end users would have trouble establishing a tool stack to interact securely with the blockchain.

Examples of Decentralized Applications

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There are numerous reasons why most dApps are built on the Ethereum blockchain before exploring them. With Ethereum Blockchain, development time for projects is reduced, and projects can be launched immediately. With the inclusion of construction kits, application models, and MetaMask, Ethereum provides a developer-friendly experience, which has successfully attracted new projects, large groups, and communities. Each dApp serves a different purpose. For instance, Zora, Foundation, Cent, and MakersPlace are options if you wish to buy, sell, or mint non-fungible digital art. Catalog, Audius, and other similar apps can be used if you want to directly pay musicians for their work.

You can use Compound Finance, Aave, Pool Together, Dharma, InstaDApp, and others for finance-related activities such as sending, receiving, borrowing, earning interest, and streaming funds. You can take advantage of platforms like 1 inch, AirSwap, ForkDelta, and others for buying, storing, and exchanging cryptocurrencies.

Conclusion

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As people and enterprises realize the true potential of dApps, their popularity is growing. As a result of the innovation and creativity of developers, decentralized applications have developed considerably over the years. This leads to the emergence of new dApp examples tailored to the needs of varying enterprises.

It is important to determine how blockchain plays a significant role in its backend to fully understand a decentralized application. Rather than relying on a central authority to engage in transactions, dApps use smart contracts. However, the disadvantages of dApps include concerns about over-centralization and network congestion.



Author: Gate.io Observer: M. Olatunji
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