Decentralised Applications

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Decentralized applications are digital applications built on a decentralised network that runs on a P2P network of computers or blockchains rather than a single computer. DApps are beyond the control of a single authority. DApps are mainly built on the Ethereum platform and can be develop for various purposes, including finance, gaming, and social media. DApps are similar to other software applications supported on a mobile device or website but are on P2P support. Popular distributed ledger technologies such as the Ethereum blockchain have helped hype dApps. 

Understanding and Working of dApps

DApps, similar to conventional apps, use the same front-end code to supply a web page. However, dApp’s back-end code is different since it runs on a decentralised P2P network. This is what keeps dApps independent of single authority control. Decentralised apps are require to execute and store on a blockchain system, most commonly Ethereum. The cryptographic token validates the app and is require to access the application. 

A centralised database and servers support a traditional application. However, dApps are support by smart contracts store on the blockchain. Smart contracts implement coded rules and mediate transactions. Ethereum tops the list of blockchains for running smart contracts. However, a smart contract is a tiny part of the whole dApp, and creating a decentralised app requires a combination of several smart contracts and employing third-party systems for the front end. 

Here are the three common key attributes of dApps:

  • They are open-source, which means all the required changes are decided with the consent of the majority of users. Hence, this requires the codebase to be available for evaluation by all users.
  • DApps provide decentralised storage, storing the data on decentralised blocks.
  • DApps offer Decentralized cryptographic data that are validated and proven genuine.

Examples of dApps

There are a plethora of dApps being develop and used. Here are a few examples of dApps: 

OpenSea is an application that stimulates interaction between blockchain-based games. The in-game collectables, irrespective of the cryptocurrency, can be exchange on OpenSea. Its current interface supports only Ethereum, but it plans to expand soon. 
Chainlink is middleware software providing tamper-proof computations, inputs, and outputs for Oracle networks. Google is running a test run for a BigQuery data warehouse.
TraceDonate is a service connecting charities and donors to beneficiaries to establish trust that donations reach those in need. Funds stay in a digital wallet and allow the donor to track the donation and how it is spent.
Minds is a social media platform that runs on open-source code and can encrypt the personal data sent by users.
CryptoKitties is an entertainment app develop by and for cat lovers. The rising popularity of cats is apparently the reason behind this app. You can buy kittens on this app with cryptocurrency, then breed them and sell them to earn profits.  

Strengths of decentralised applications

Decentralized applications have the following strengths:

Fault tolerance: A decentralised network can stay available even if one node in the network is still working. However, it may severely downgrade the performance. Since there is no centralised network, a hacker will find it extremely difficult to attack the network of nodes enough to take down a dApp. 

Data integrity: Data stored on the blockchain is resistant to change because of blockchain consensus algorithms. Hence, the data is immutable and secure. 

Flexible platform: The Ethereum blockchain provides enough flexibility to enable the rapid development of dApps for various industries. It provides the infrastructure that the developers need to divulge their efforts toward finding innovative uses for dApps. Soon, we can witness the rapid deployment of dApps in banking and finance, gaming, online shopping, and social media industries. 

User privacy: DApps do not require users to submit their personal information to any specific app, as they use smart contracts to enable transactions between two anonymous parties without relying on a central authority. Hence, they can safeguard user privacy. 

Weaknesses of decentralised applications

Decentralized applications have the following drawbacks:

Maintenance: DApps require the consent of all the peers on the blockchain network to undergo any changes, making it difficult to maintain, update, or debug the app.  

Hard to scale: Decentralized networks might be harder to scale effectively, especially for an event that requires numerous computations resulting in a network overload and thus leading to network congestion. 

Network congestion results from difficulty scaling the dApps effectively at a more significant event. 

User experience: Centralized apps have an easy-to-use interface that encourages the users to interact with the app. So getting people to transition to decentralised apps will require the developers to develop effortless user experiences that are already popular. Unlike centralised apps, dApps require public and private keys to log in rather than the traditional username and password. 

What Is the Difference Between a Centralized and a Decentralized App?

A centralised app is a single entity owned. The software for a centralised app stays on one or more servers managed and supervised by the company. The user interaction with the app is restrict to downloading a copy of the app and then sending the data to and fro from the company’s server.

Well-known centralised apps like Twitter, Instagram, Facebook, and Netflix are a no-brainer. Banking and finance institutions also use centralised apps to enable their customer’s access to their accounts.

A decentralised app operates on a blockchain or P2P network of computers. It allows users to engage in transactions with one another without relying on a central authority. The dApp user will pay the developer a certain amount of crypto to download and use the program’s smart contract or source code. The source code allows users to complete transactions and encrypts personal information.

Crypto kitty is an example of a dApp that enables users to trade virtual cats. Peepeth, a dApp, is a social media alternative to Twitter. MakerDAO is another dApp that provides a decentralised credit service that enables users to open a CDP (collateralised debt position) and supports the stablecoin Dai.

Encrypted Takeaway

Decentralized applications, or dApps, are the future. They may be ruling many industries; it is just a matter of time and synergy for the users to adopt the new technology. Just like centralised apps, it has its share of strengths and weaknesses. However, it is excellent progress in terms of streamlining the finance sector.

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