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What Are Decentralised Applications (DApps)? How Do They Work?

Are you a newbie to the crypto world? Are you aware of the acronyms and the unique terminologies that cryptocurrency offers? If not, then it is quintessential to be aware of these acronyms.

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In the fast-growing world of technology, new inventions surface to the levels every new day. With the evolution of technology in the form of Applications abbreviated as App, much more modernization within the ecosystem takes place every now and then.

One such evolution within the ecosystem is the birth of Decentralized Platform and the Decentralized Applications commonly known as DApps. In this composition let us have a detailed overview of all the concepts related to DApps.

Let’s get in deeper into this detailed guide on Decentralized Apps…


What Are DApps?

Decentralized Applications or DApps are basically digital applications or programs that operate on a blockchain or a P2P network of computers. Putting it in another way, the open source software that leverage on blockchain technology is known as Decentralized Application (DApps).

It is a protocol which runs on a distributed computing system. Unlike the centralized platform, no third party is involved in any of the transactions done on the decentralized platform.

Therefore, it solves the issues related to data ownership and anonymity by gaining control of your own data and establishing anonymous access to applications over the internet. A decentralized platform is also known as a peer-to-peer(P2P) network due to absence of any middleman.

DApp Features

Now that you know what is DApp, let’s move further into the criteria wherein you can judge a DApp:

Open Source: Basically, DApps are governed by autonomy and the consensus or majority of users decide all the changes. Also, the source code of the app is available to all.

Decentralized: To avoid the perils of centralization, all records of the app’s operation needs to be stored on a public and decentralized blockchain.

Incentives: The blockchain validators need to incentivized by gratifying them with cryptographic tokens.

Algorithm: The decentralized application community should agree to a cryptographic algorithm, basically to show the proof of value.

Categories Of DApps

Based on the blockchain models, the DApps are classified into three categories:

The first category manages money. This category allows users to exchange cryptocurrencies to settle a contract with another user.

The second category also involves money, along with some sort of data from outside the blockchain. To implement this, either some centralized portion of the setup is required or a blockchain based “Oracle” is needed to connect to the outside world.  

The final category is the “other” category. This category involves voting and governmental systems. The introduction of the Blockchain concept aims to eliminate voter fraud, hacking and other interference which make elections much more secure than today.

How To Build A DApp?

Building decentralized apps is not as easy as building centralized apps as it requires a set of sequential steps and time frames. Follow the steps below to build your desired Decentralized Application:

Step 1:

The very first step is publishing a whitepaper that contains the concept, features, and technicalities of DApp. This process is also open to feedback from the community. Adding a roadmap is always an added advantage to the sales point of view.

If you wish to see your DApp succeed, it is quintessential to have a roadmap open to the market. In order to build trust and reliability among the community, it is better to highlight the capabilities and history of top developers and ideators in your project.

Step 2:

The concept of Initial coin offerings (ICOs) is the initial step for all DApps. Initially, you will sell your crypto-coins, this fuels your DApp. They are also a way wherein you can gather crowdfunding for your project.

You need to first explain how the ICO of your DApp will be. You should also share with the community, whether your DApp will have pre-mined tokens or a mining mechanism in place.  Also, it is very important to be open about the allocations of tokens.

Step 3:

After procuring the funds as well as fine-tuning the concept, you have to now initiate the development process. After you have begun with the process it is important to share the weekly or monthly reports of the development process. Basically, this helps you to build an inclusive environment for community members.

Step 4 :

If you want your community to completely involve in it, you need to launch the product with detailed release notes and maintenance plans. Also, it is necessary to regularly update it as per your roadmap, your vision, and your community.

How Does A DApp Work?

The decentralized application functions by implementing the features of DApps discussed earlier. Basically, a DApp is an open-source software implemented on decentralized blockchains. Also, they’re fueled through tokens that are generated using a protocol/algorithm.  

As it is decentralized, anyone can see and contribute to the code.  This fastens the scalability process for product development with respect to quality and quantity. The next step is to decentralize the app through blockchain. Eventually, to add records/transactions to such ledgers, tokens are used. These tokens are then mined or pre-mined using different algorithms/protocols.

Currently, the proof-of-stake (PoS) and proof-of-work (PoW) are the popular protocols to use. These protocols are useful to reach a consensus or agreement between all the users of that DApp.  

How Different is a DApp from an App?

As mentioned earlier, the DApps are much similar to the traditional App but the main difference is that DApps work on a decentralized blockchain. Hence, the decentralized platform has many advantages over the centralized platform on which the traditional Apps are built. Let us list out the major advantages of DApps over Apps.

  1. DApps can be used as a ‘Store Value’

DApps can be used to store cryptocurrency and later handed it over to the users, whereas in traditional Apps cannot be used as a Store Value.

  1. All the DApps on the blockchain are inter-compatible

Unlike traditional Apps, DApps can integrate with each other very easily. The procedure is also very simple without the necessity of any specific permission.

  1. Security

DApps provides the most secured platform where-in with any suspicious activity is closely monitored and restricted. This is only because the DApps have a backend managed by the public which is not in case of traditional Apps.

  1. DApps are extremely hard to remove

Once the DApp is loaded on the blockchain, it is very hard to remove as it would require the consent of the user.

  1. Transparency and Control

As the DApps are being managed by the users, transparency is maintained and they share the whole control over the stored data. 

  1. Cost-Effective

The users are charged with very less amount of fee compared to that of the traditional Apps, where the fee is a courtesy to the owners of multiple nodes of the network.

Advantages Of DApps

  • A DApp is more resistant to attacks. It fails only if every computer in the network fails, but this is almost impossible.  
  • DApps are also resistant to modification or censorship. Once the information is added to the blockchain, it gets stored permanently.

If DApps should achieve wider adoption, the creators should consider offering its audience with a seamless experience and easy to navigate processes. Till now DApps could not live up to the early hype as the technology is new and all these things require some time.

The Future of DApps

With enormous advantages, DApps also share some disadvantages too, 

  • It is difficult to scale at a large stage as there is an absence of a single point contact as in traditional Apps.
  • The problem solving and bug fixing is very complex
  • Without the KYC process, the transaction time increases, reducing the speed of the transaction.
  • DApps lack third party apps which are required to fetch the third-party information

If we consider the growth of blockchain technology in recent years, the possibility of DApps overcoming its limitations is also high. Moreover, with growing competition among the emerging companies in the blockchain field, space is expected to grow the skies. 

DApps are considered to be the next revolution in the blockchain sector. However, the new inventions can possibly nullify the limitations the DApp carries at present. According to some reports, the DApp market is expected to expand at a very high pace to make more millions by the end of 2025.

Concluding Thought

DApps work similar to the traditional Apps but run on a decentralized blockchain platform. There are many advantages of DApps but they also carry some limitations too which could possibly be nullified in the near future. However, DApps can be looked upon as emerging technology within the blockchain space.

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Renuka B

Renuka is a crypto-journalist at Coinpedia. She explores and writes about crypto coins, the latest updates, etc.

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