Everything on a blockchain is true, accurate, and complete information and it’s not hacked or modified maliciously. Blockchain uses cryptocurrencies such as Ethereum, Bitcoin, and many more. It is a digital ledger of all of the transactions that have occurred in this cryptocurrency history. This ledger is distributed to all the different computers on the blockchain network. Miners are the computers that are sitting on the blockchain and they store a copy of this digital ledger. So, every single computer that is on, for example, the Ethereum network has a copy of the Ethereum blockchain and this makes it very, very hard for someone to maliciously change or send a malicious transaction on the blockchain.
If someone wanted to modify something or send a malicious transaction on the blockchain, he would have to do it to all the computers on the blockchain because every computer is storing a copy of the blockchain. This is why it is called decentralized because they distributed the ledger across all of the computers on the blockchain network, implying that everything on the blockchain is correct (trusted). There is no central authority or entity that has all the control.
- Introduction to dApps
- The decentralization of operations
- Centralized Apps vs Decentralized Apps
- Where to build your Dapp
- What dApps are out there?
- Benefits of dApp
- Cons of dApps
- Future of dApp Ecosystem
Let’s start discussing each of these topics in detail.
Introduction to dApp
dApps or decentralized apps are applications or programs that run on the blockchain. Since we’re talking about “decentralized” apps, they’re free from the control and interference of a single authority. These apps use smart contracts (source code) for their logic.
Properties of dApps:
- Decentralized: dApps operate on decentralized platforms where no one person or group has control. All records of the application’s operation are stored on a public and decentralized blockchain to encourage transparency, trust, and efficiency. Many businesses today are built around the idea of centralization. They are based on a shared database that replicates stored information across all other nodes.
- Incentivized: Anyone that helps secure the application’s blockchain is rewarded with cryptographic tokens.
- Deterministic: dApps are not dependent on the environment in which they get executed, they perform the same functions everywhere.
- Isolated: dApps are isolated from the other transactions and workings in the blockchain. In case there is a bug in the blockchain, the dApps won’t be hampered.
- Open-source: Ideally, all changes are decided by user and developer consensus. Its code base should be open to scrutiny.
- To their contributing users, dApp tokens are generated to provide values to them. Users are granted access to them in exchange for tokens. Miners are also rewarded with tokens when they successfully contribute to the ecosystem.
The Decentralization of Operations
The code advantage of decentralization is that the user never has to worry about trust, and never has to put the trust in a central organization, institution, government, or whatever it may be. This is also the reason why cryptocurrency has become super popular, especially in a lot of parts of the world where they cannot put their trust in the government, bank, or any institution. Decentralization it is meant that when once a developer has released a codebase of a dApp, other developers are capable of building on top of it. To put it simply, there’s no control of a single authority over it.
Centralized App vs Decentralized App
| Basis |
Centralized Apps |
Decentralized Apps |
|---|---|---|
| Definition | A centralized app is owned by a company and is hosted on a server or servers. For a user to interact with the app, they need to send data back and forth by downloading a copy of the app. The exchange of data is done from the server. | A decentralized app (dApp) is not hosted on any server. It operates on a blockchain. The user can directly engage in transactions without the interference of a central authority. The dApps user will have to pay some amount of cryptocurrency to the developer to use the program’s source code. The source code is also known as the smart contract. |
| Third-Party Involvement | There is a Third-Party Involvement. | There is no Third-Party Involvement |
| Control | The control of the complete application is in the hands of the central authority. | There is no central authority that has control of the application. All the control lies within the app itself. |
| Security | The centralized apps are more prone to hackers and pose a threat to security and data leaks. |
The decentralized apps are more prone to hackers and pose a threat to security and data leaks. This is because:
|
| Ease of Use |
The centralized apps are easy to use and provide a good user experience. It requires the use of a username and password that is easy to remember. |
There is no ease of use when it comes to dApps, since there’s no central authority that has the control. It requires the use of a public and private key to log in, which is not easy to remember. |
| Exchange fees | When it comes to centralized apps, the exchange fees are high. | In decentralized apps, the exchange fees are relatively low. |
| Anonymity | Centralized applications don’t offer anonymity. | The users are anonymous in decentralized applications. |
| Speed | The centralized applications are fast. | Dapps can sometimes be slow to load, and payments can take a while to process. |
| Trust | There is no trust in centralized applications because one is taking the word of big corporations, marketing, or PR agencies, for the security and database. These organizations could be corrupt. | In dApps, all of the code is open source so the user can see for themselves what the application does and how it does it. One would never have to take the word of big corporations, marketing, or PR agencies. |
| Downtime | Sometimes, due to a lot of loads, the centralized applications could go down. | Dapps have a zero/low downtime. On the blockchain, it is not possible. |
| Cost | They are cost-effective. | They are costly. |
| Censorship | Centralized applications provide censorship. For example, Twitter censors account if it finds some offensive posts or does it when the government tries to censor accounts if it goes against their agenda. | In the case of decentralization since peers interact directly, there is no or less censorship. |
| Examples | Twitter, Facebook, Instagram, bank apps, and Netflix. | A dApp game called Cryptokitties where the user can sell and buy virtual cats, Peepeth (An alternate to Twitter), Bitcoins, Ethereum, Omni, etc, |
Where To Build Your dApp?
- EOS is the most active dApp development platform in terms of daily users. It is also a decentralized, blockchain-based platform used to host and run dApps. The network’s cryptocurrency is the EOS token itself. It offers users functionalities to develop blockchain-based apps or dApps in a way that is similar to web-based application development.
- Other than EOS, there is Ethereum that leads the way with a number of active projects on-chain. EOS’ main competitor is Ethereum. One of the reasons for its popularity is its flexibility. Ethereum provides a native Turing-complete programming language to a blockchain, called Solidity.
Other than EOS and Ethereum, we have sole platforms like Cordano and TRON.
What dApps Are Out There?
- Bitcoin: The first type of dApps are the ones that have their own blockchain, for example, Bitcoin and other cryptocurrencies. It allows for the transfer of currency without the need for an authority to deem transactions valid. This lack of a central authority is what makes Bitcoin a decentralized application
- Omni: Next we have the types of dApps that are built on top of the dApps that are discussed above. For example, Omni is a distributed trading platform that is developed on top of the Bitcoin blockchain as a ‘layer’. The main objective of it is to facilitate ‘peerless, trustless, and effortless’ exchange of assets or value between parties, all without involving middlemen.
- Ethereum: While both Bitcoin and Ethereum may be defined as dApps, Ethereum has a bigger plan in mind. Dapp library Ethereum enables developers to write programs called smart contracts that are stored on the Ethereum blockchain. These smart contracts were then stored and executed across every node in the network making them decentralized applications rather than needing to develop an entirely new blockchain for every application. Ethereum is a very secure platform for developers to build and deploy dApps.
- Game dApps (Cryptokitties): It is a decentralized blockchain game that allowed users to buy little kitties. Technically, what one is buying is an NFT data of rights to that certain token that represents the kitties. The fun part of this game is that the user can collect a bunch of these kittens and even breed them to create more kittens. In the community, the older generation kittens are generally the more valuable ones. One can sell them to make profits.
- Tracking dApps (Zapper.fi): Zapper.fi is actually a website that collects information about wallets that you have and displays it all on one page. Not only will it look at major dApps and find out how much money or coins you have, but it’ll also do it for many different networks as well. Zapper.fi is free to use and the user can also see a dashboard of their entire blockchain portfolio in one place. On the platform, the user can exchange into more than 3000 digital assets, earn passive income by staking their assets and invest in various DeFi investment opportunities.
Benefits Of dApps
- Zero downtime: Due to zero downtime malicious actors can’t launch DoS attacks targeted toward individual dApps and the dApp is always running and in use
- Privacy: dApps don’t need to be provided with real-world identity to deploy them, a public key and a private key are required to log in
- Unmodifiable data: Data that is stored on the blockchain is unmodifiable. There is no chance for anyone to alter the data once it gets stored on the blockchain.
- Censorship resistance: Another benefit of having code stored and executed on the blockchain is that it’s impossible to take down an application without taking down every single node on the network. In the case of decentralization since peers interact directly, there is no or less censorship. For example, if you release a banking application that’s better and cheaper than the bank, the bank can’t just buy it and close it down; the application will live on the blockchain for everyone to use.
- Trust: One would never have to take the word of big corporations, marketing, or PR agencies. All of the code is open source so the user can see for themselves what the application does and how it does it.
- Guaranteed execution: Because the code is executed across an enormous network, the user gets the desired results. As long as a single node exists, the network will practically never go offline, as long as your code exists on it. Sometimes YouTube and Twitter are down, right? well, not on the blockchain.
- Stability: dApps are more stable and easily accessible compared to conventional centralized applications.
Cons Of dApps
- Updation: As every peer in the network has to update their node software, therefore fixing bugs or updating Dapps is difficult.
- Slow: Sometimes, Dapps become slow to load, and payments may also take a while to process.
- Maintenance: the code and data published on the blockchain are harder to modify, therefore dApps can be harder to maintain
- Network congestion: the entire network gets backed up when one dApp uses too many computational resources
- User experience: the average end-user might find it too difficult to set up a tool stack necessary to interact with the blockchain
- Crime: Since every action that takes place on the blockchain (dApps) is anonymous, there could be a misuse of resources and nobody would know about the culprit. Anonymity leads to an issue here.
- Performance overhead: Every node in the network must work hard to meet its objectives, resulting in performance overhead.
- Hard to configure user-friendly experience: It is sometimes harder to engineer and configure user-friendly experiences. It becomes an issue to develop such applications because there is no central authority to verify user identity (KYC).
- Not always best user experience: Since dApps are decentralized, they don’t always have the best user experience. In order to log in, one would need to use a public and private key to log in, instead of a username and password that one would use on traditional applications.
- Cost: Decentralization can cost more than centralization as it requires the setting up of systems that can make communication more automatic.
Future of dApp Ecosystem
Even though dApps are seen by some as an emerging technology that will bring about a revolutionary change, dApps are not in much demand. One argument is that the limitations regarding the scalability of currently existing blockchains cap the popularity of dApps. The game Cryptokitties had caused major congestion on the network. It raised questions on Ethereum’s capabilities and working as a single decentralized application had made the network unstable. Blockchain technology has changed the entire world. New and innovative services are introduced with the help of dapps. Dapps are just one of the byproducts that offers secured open-source software for everyday users. As dapps continue to grow in number and more innovations enter the playing field, it is always important to understand the advantages and disadvantages of each application and technology.