Decentralized applications, commonly called DApps, represent a new frontier of blockchain-based applications. They are not controlled by the central authority or anyone’s company and operate on a peer-to-peer network instead of a computer network.
In a peer-to-peer network, information is continuously distributed among participants, rather than stored on a central server. However, a large decentralised network suffers from lower speed and performance than a central server, but a large number of participants can make the peer-to-peer network optimal and resilient.
Although today we all know it for its fame and its growth in value, Bitcoin was one of the first examples of DApps, which triggered a wave of innovation leading us today to talk about the decentralized internet, and smart contracts, which are the most important building blocks for DApps.
Today the Ethereum blockchain is the most popular platform for creating DApps, on this platform the most used DApps are those Trading cryptocurrencies, exchanges and games. A DApp can have a wide range of features that go far beyond simply transferring digital currencies. It is able to transfer all kinds of data and have a variety of use cases. These types of applications can be much more powerful than traditional applications, and this will most likely lead to some popular services and programmes being decentralised, thereby increasing flexibility, security and transparency. But in front of all this we also have negative aspects such as the fact that decentralized networks are harder to scale and their computing power fluctuates as its power is influenced by multiple factors including node power and number of nodes and this makes it difficult for us developers to predict network functionality.
Categories of DApp: To consider a decentralized application, it must be open source and standalone, with no company controlling most of the application’s tokens, the application must be decentralized and the data stored on public blockchain. It is important to remember that decisions to make changes to the DApp are made on the basis of user consent. Users must use the tokens to access the application.
3 types DApp:
1. DApps that have their own blockchain. An example of the first type is the same Ethereum, Neo and the already mentioned Bitcoin.
2. Dapps that use protocols of the second type to work but are also protocols and require a token to work. An example of protocols of the second type are the DApps on the Ethereum network. Example: protocol 0x because it was built on the network of Ethereum.
3. DApps that use other Dapps with their own blockchain to work, these are also protocols and to work they need their own tokens. An example of a third type of DApp is decentralised exchange DDEX which is executed on protocol 0x.
Advantages of DApps:
INCREASED SAFETY -> A decentralized application stores all its data on the blockchain and its data is immutable. Even the creator cannot tamper with any data after it has been added to the network.
The way many blockchains discourage cyber attacks is through the Proof of Work or Proof of Stake protocol. The fact that there is no centralized governing body makes it very difficult for monopolists, governments or millionaires to control the network and applications.
DECENTRALISED ENTITY -> Applications are based on smart contracts, which means they don’t need an administrative authority to keep them running, and user data isn’t stored on a centralized server, which most of the time is the target of hackers. Data is distributed over multiple distributed “nodes” or individual client computers that provide the processing power of the network, so even if a node is attacked and compromised, the entire network remains protected.
CONTINUOUS AVAILABILITY -> As long as a network node is up and running, the application remains available, its performance will be reduced, but the network will continue to exist.
How do decentralised applications work? The aim of the DApp is to build a self-sufficient system. And this decentralised system does not require intermediaries and connects users and suppliers directly.
SMART CONTRACTS -> Ethereum-based DApps are created using smart contract technology. The latter function as real contracts but with some differences. The most important is the fact that smart contracts only code. Once the contracts have been implemented their business is fully automated. I would like to point out that at the heart of a smart contract is a simple “if/then” algorithm, which is executed as soon as a number of preconditions are met.
For example, if you are distributing rental cars, you can formalize the terms of the contract into a smart contract that will be executed automatically, such as providing the driver with the use of the vehicle if he has paid the monthly installment. This will protect both parties to the contract from fraud.