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A decentralized application (DApp) is an application built on the basis of a decentralized network and consisting of a smart contract backend and a user interface frontend.
DApps are “non-permissive”, meaning anyone is free to use them. Indeed, many DApps include smart contracts written by others. They are also transparent and “untrustworthy”, meaning anyone can verify their authenticity and functionality.
Understanding Decentralized Applications (dApps)
Web applications such as Uber or Twitter run on the basis of a computer system that is owned and operated by a company that has the authority to manage the application and its operation. Regardless of the number of users, the backend is controlled by the company.
DApps can work on a P2P network or on a blockchain network. For example, BitTorrent, Tor, and Popcorn Time are applications running on computers that are part of a P2P network that allows multiple participants to consume content, transmit it, or sow it.
DApps applications run on the blockchain network in a public, decentralized, open source environment and are free from control and interference from any one authority.
For example, a developer can create a Twitter-like dap and place it on a blockchain where any user can post messages. After publication, no one, not even the creators of the application, will be able to delete these messages.
DApp Uses
DApps applications have been developed to decentralize a number of functions and applications and eliminate intermediaries. Examples include self-executing financial contracts, multiplayer games, and social media platforms.
dApps applications have also been developed to provide secure voting and blockchain-based management. dApps can even be integrated into web browsers as plugins that allow you to place ads, track user behavior or collect cryptocurrency donations.
Some examples of practical use of dApps include
Financial Services
dApps can be used to simplify peer-to-peer financial transactions such as currency exchange or asset transfers.
Supply Chain Management
dApps can be used to track the movement of goods along the supply chain, ensuring transparency and accountability.
Identity Verification
dApps can be used to securely store and verify identification information, for example, for voter lists or passport applications.
Real Estate
dApps can be used to facilitate the purchase and sale of real estate directly between the buyer and seller, as well as to track the ownership of real estate and related documentation, such as documents.
Healthcare
dApps can be used to store and track medical records, as well as to facilitate communication and interaction of healthcare professionals.
Education
dApps can be used to create decentralized learning platforms that allow students and teachers to interact and collaborate directly, without intermediaries.
Social Networks
dApps can be used to create decentralized social media platforms that allow users to interact and share content without the involvement of a central authority.
Prediction Markets
dApps can be used to create decentralized platforms for prediction markets, allowing users to make predictions on various topics and potentially receive rewards for accurate predictions.
DApp Scams
Fraudulent actions are committed through dApp. There are known Ponzi schemes in which early investors receive money at the expense of investments by later investors, creating the appearance of large profits.
Fake initial coin offerings (ICOs) were used to raise funds for the development of a new cryptocurrency or dApp, which were not going to be created.
Phishing attacks have been noticed on dApp, when people were deceived using fake websites or emails to force them to disclose confidential information.
In addition, some dApps are used to distribute malware or viruses that can compromise users’ devices and steal confidential information.
It is important for users to exercise caution and due diligence when interacting with dApps, as the decentralized nature of these applications can make it difficult to track and hold attackers accountable.
According to the industry analysis group DappRadar, in 2022, a record number of hacks and vulnerabilities were recorded in dApps – 312, which led to losses of about $ 48 billion.
Advantages and Disadvantages of dApps
Advantages
Many advantages of dApps are related to the fact that the program ensures the privacy of users. In decentralized applications, users do not need to provide their personal information to take advantage of the function that the application provides.
DApps use smart contracts to complete a transaction between two anonymous parties without having to rely on a central authority.
Freedom of speech advocates point out that dApps can be developed as alternative social media platforms.
The decentralized social media platform is resistant to censorship, since no blockchain participant can delete or block messages.
Ethereum is a flexible platform for creating new dApps, providing the infrastructure necessary for developers to focus their efforts on finding innovative ways to use digital applications.
This can allow the rapid implementation of dApps in various industries, including banking and finance, games, social networks and online stores.
Disadvantages
The use of dApps is still in the early stages, which means it is experimental and involves certain problems and unknowns. There are questions about whether applications can scale effectively. There are concerns that an application requiring significant calculations will overload the network, causing it to overload.
Another problem is the possibility of developing a user-friendly interface. Most users of applications developed by traditional centralized institutions expect ease of use, which encourages them to work with the application and interact with it.
In order to get people to switch to dApps, developers will need to create an interface and a level of performance for the end user that is not inferior to popular and already existing programs.
Another limitation of dApps is the difficulty of making changes to the code. After deployment, the DApp is likely to need constant changes to make improvements, fix bugs or security risks.
According to Ethereum, it may be difficult for developers to make the necessary updates to the DApp, since the data and code published in the blockchain are difficult to modify.
FAQ
What is EthereumdApps?
These are decentralized applications that are developed on the Ethereum platform and work on its basis. EthereumdApps use smart contracts for their logic. They are deployed on the Ethereum network and use blockchain platforms for data storage.
What is the difference between a centralized and a decentralized application?
A centralized application has one owner. The application software of a centralized application is hosted on one or more servers controlled by the owner.
As a user, you interact with the application by downloading a copy of it, and then sending and receiving data from the company’s server.
A decentralized application (also known as DApp or dapp) runs on a blockchain or peer-to-peer network of computers. Users carry out transactions directly with each other, rather than relying on a central authority.
The DApp user pays the developer a certain amount of cryptocurrency to download and use the source code of the program. The source code is known as a smart contract that allows users to make transactions without disclosing personal information.
What are examples of centralized and decentralized applications?
Instagram Facebook, Instagram, and Netflix are well-known examples of centralized applications. Banks and other financial organizations use centralized applications to provide customers with online access to their accounts.
Peepeth, a social network alternative to Twitter, is an example of a decentralized application.
Cryptokitties is a DApp game that allows users to buy and sell virtual cats. MakerDAO is a decentralized credit service that supports the Dai stablecoin and allows users to open collateral debt positions (CDP).
