What is a decentralized application (DApp)? The following explains what DApps means, their types, examples, and applications.
April 23, 2019. AtoZ Markets – Decentralized applications (DApps) are applications. That run on blockchain technology to transform the way of business operations. They are open-source and transparent yet secure. They are decentralized. So any authority does not control them. They run on a peer-to-peer (P2P) network of computers. They are also self-sustaining and connect users to providers. So Providers could initiate and complete transactions without intermediaries. So, we could say Bitcoin is a DApp, and so are many other cryptocurrencies like Ethereum, EOS, and NEO. What are the main features of DApps?
1. They are decentralized: So, no single entity controls the majority of the tokens.
2. They are open-source: Data and records are stored on a public blockchain. And changes are decided through the consensus of users.
3. They are incentivized: Network miners will get Digital tokens as a reward for their activities.
4. They make use of cryptography protocols like Proof of Work(POW). And there are ongoing plans to form a hybrid PoW/PoS in the future.
Bitcoin and Ethereum DApps
Bitcoin is the first DApp and one of the groundbreaking innovations in the last 20 years. Bitcoin’s primary purpose is to solve problems without any third parties. After Bitcoin, Developer has created thousands of DApps in the previous ten years. Currently, the Ethereum blockchain supports over 2000 DApps making it the most popular platform for building DApps. Ethereum can power Smart Contracts. Users use Smart contracts exclusively to exchange digital assets and, most often, a digital currency. One of the essential uses of DApps is to power Smart Contracts, so it makes sense that Ethereum power most DApps. Additionally, some of the most used Ethereum DApps include Idex, Cryptokitties, LocalEthereum, and ForkDelta.
Processes of DApp development
The following look at the basic things needed to develop a decentralized application.
- Whitepaper: A whitepaper is describing the DApp and its features. This will also include the goals of the DApp. And it can solve the problem.
- Token sale: DApp introduces an initial token sale and a token reward system.
- ICO: The ownership of the DApp is through an initial coin offering (ICO).
- Launch and Implementation: The funds realized from the ICO, DApp will effectively use to build the DApp and implementing it.
Types of DApps
According to the Ethereum white paper, There are three categories:
- Financial applications: They allow users to carry out transactions and contracts with their money. But these apps only manage money.
- Semi-financial applications: These applications involve both money and information. So, there is a big non-monetary side of the contract concerned.
- Governance/Political applications: These applications do not solve financial problems. Moreover, users use them in political/governance activities such as voting, population census, etc.
DApps solving real-life problems
They are limitless in their potential usefulness. Also, they solve many problems in nearly every field of human endeavor. The governments can use them for various purposes. Those purposes are tax collection, identity authentication, housing units distribution, elections, population census, etc.. They can do almost anything. You can also apply them in food delivery services, entertainment industry, games, supply chain management, and many others. The possibilities are endless. Industries can benefit significantly from the security, cryptocurrency integration, and privacy offered by DApps.
Think we missed something? Please share with us in the comment below.