What are DApps or Decentralized Applications?

A DApp (“Decentralized Application” or “decentralized application”) is a software application whose operation is provided partially or totally by a set of different actors. To function, it generally relies on one or more smart contracts, i.e. computer protocols that verify contracts) that run on one or more blockchains.

Typically, a decentralized application comes with a transparent user interface, distributed data storage model, message communication protocol peer to peer, as well as a decentralized name resolution system. On the monetary level, Bitcoin can be considered as a decentralized application. Opposed to credit organizations, Maker or Compound can also be seen as decentralized lending applications.

If you want to learn more about these new apps, then read until the end.

Let's go

The history of DApps

DApps are not something new since last year, the reality is that they have been with us for over 20 years. The first P2P network applications were as well known as Napster, eMule or BitTorrent. This is because the information these download apps access is located in the network of nodes (computers) that are part of their network.

If you connect your computer to the BitTorrent network, you will be able to access and download content that is on other users' computers as well as make your content available for download by others.

The concept of decentralized application has progressed over time and in 2009 it took a leap without turning back. Bitcoin is born, the world's first DApp to use Blockchain. Already in 2014, Ethereum was born and other projects Blockchain 2.0 and 3.0 followed.

Already in 2014, he saw the second DApp using blockchain, Ethereum. Using the Solidity language to build smart contracts has helped boost this technology. The secret to success lies in decentralized applications that are controlled by users and not by companies, for example a metaverse like Fortnite which is controlled by a company but Decentraland is a DApp decentralized and open that is controlled and developed by users.

What are DApps or Decentralized Applications

DApps or Decentralized Applications are a special category of applications that work on the basis of a decentralized network of computers or computers. The data generated by this application is hosted on a computer network which keeps this information secure and accessible.

This decentralized network is a Distributed Ledger Technology (DLT) usually based on blockchain technology. To give a simpler example, we could imagine a DApp as an application known as Facebook, Tinder or Robinhood but instead of running on a central server (there are usually several), it runs on a network made up of thousands of nodes or computers.

Advantages of DApps over a centralized application

1# Security

The main advantage is application security. The fact that this application runs on a network made up of thousands of nodes gives it the security that even if one or more nodes in the network it is running on fails, it can continue to operate.

This does not happen in the case of a centralized application that runs on a central server, because if it is attacked, it will affect the continuity of service and the application will stop working. Have you ever felt like your Whatsapp stopped working for a few hours? Well it happened because the central server has failed.

2# They are decentralized

Although we have already commented on it several times, decentralization is a great advantage of DApps. Especially for applications that must have a high level of fault tolerance.

In addition, it is a competitive advantage that increases over time, because the larger the network on which said DApp is supported, the more computers (or nodes) there will be in the system and the more it will be complicated for him to crash or collapse.

3# They are based on free software

Finally, one of the great pillars or advantages of DApps is that their construction was developed around free software. This allows a large community of developers to exist behind it to provide service and support to the network, in addition to achieving a high level of transparency and security.

Differences between a decentralized application and a traditional application

the difference between the two types of applications is at two levels: the backend and data storage.

Differences in the backend

The backend refers to the “logical” of the application that makes it work. In the case of traditional applications, all of this logic is centralized in a central computer or server.

However, in DApps, the backend is tied to a smart contract that runs on a Blockchain like Ethereum. This gives it another series of advantages such as being based on Smart Contract, and being these public smart contracts, a high level of transparency and security is guaranteed.

Differences in data storage

The next element where we see differences between a traditional application and a decentralized application is data storage. In traditional centralized applications, data is usually stored in a central computer or computer. This means that an attack on this central computer or server can lead to the complete loss of user information. It does not occur in decentralized applications where data is stored in the computer network or blockchain. This ensures that user data is never lost.

Decentralized application categories

In the world of DApps we find different levels or categories which are:

Tier I dapps

In this level or classification, we include decentralized applications that run on their own Blockchain.

Tier II dapps

At this level of DApps we find all those DApps that are hosted on a Blockchain that does not originate from the DApp itself and that operate based on their own Tokens or Tokens of the blockchain in which they are running.

Tier III DApps

Tier III DApps use Tier II DApps to work properly.

Examples of the best DApps

To end this guide on what decentralized applications are, we review the biggest markets.

Decentralized application: CryptoKitties

It is probably the most famous DApp that you have surely heard in the media. Cryptokitties is a game of collecting digital kittens decorated around different themes.

This is a DApp which is hosted on the Ethereum Blockchain (DApp level II). It is one of the oldest that exist. Yet they exploded in popularity in 2017 and 2018 mainly because they also became a huge market for speculators who saw a trading market with huge returns.

Each of these digital kittens is 100% unique and belongs to the person who buys it. They cannot be reproduced, destroyed or stolen.

CAD market

The stablecoin market is already overtaking the 100 billion dollars. Therefore a large number of DApps have been developed around this market. One of the most successful examples is that of Market DAO.

MarketDAO is a platform that allows you to buy stablecoins. Later you can transfer them to the platform and in exchange they offer you a fixed annual return which is usually around of 6%.

If you realize, the operation is similar to a bank. I deposit my money and in exchange they offer me a return. The bank can use the money I gave them to issue loans to third parties that return profitability over time.

The difference that MarketDAO (and similar platforms) bring to the ecosystem is that they facilitate accessibility to financial products. The loan seeker does not have to go through the lengthy and demanding approval processes of a traditional lending institution.

IPSE

IPSE is a unique application in its environment. It is a level II DApp and a search engine, just like Google, Yahoo!, Bing or Ecosia. It is based on the Blockchain EOS.

IPSE is different from the traditional web browsers we use. First of all, it uses another protocol than the HTTP protocol, the IPFS (Interplanetary File System).

Apart from the protocol difference, IPSE does not feature advertising. Its business model is not based on advertising. This is considerably new, especially compared to search engines like Google and others.

Finally, the last difference is that IPSE tries to significantly strengthen user privacy. In this way, the search engine does not collect user data on the type of searches performed or in what context they are performed. Of course, if a user wishes to voluntarily contribute data, they will be rewarded with IPSE tokens which can then be traded on a secondary market.

Conclusion

The DApps market, like the blockchain market, is exciting and growing exponentially. They come to bring us a new era of possibilities that will innovate in all sectors that deal with a large amount of data and information. But, as with any new technology or trend, you have to be well prepared and trained.

Do you have anything else to say? Leave us a comment