Running a business as well as keeping it up to date can be challenging in today’s date as we are living in a huge competitive world. As the best mobile app development company in Bangalore, India we always seek new and improved ways and implement new ideas to present your company as a big success. One such way is through the Decentralized Applications or dApps.
An overview of Decentralized Apps or dApps-
Wikipedia defines DApps to be a computer application that runs smoothly on a decentralized computer system. Decentralized applications or dApps are digital applications or programs that basically exist and run on a blockchain or on a P2P network of computers instead of a single computer. These are out of the reach of the purview and control of a single authority. Dapps or Decentralized apps are almost similar to regular web apps but with a twist. They offer several additional features as mobile app development is concerned along with advanced security as compared to the standard apps. They provide improved accessibility to the company’s customers and can also be owned by anybody on the internet.
For example- you can take a few regular applications, such as Zomato or Ola. These applications are owned and operated by a single entity, who have full authority/ ownership of those apps. They are responsible for making the application, running it, controlling it, and also modifying it as per their requirements. There is no limitation to use the application, but the backend is only governed and controlled by the developing entity. A standard web app like Uber or Twitter runs on a computer system that can be owned and operated by an organization, thus giving it full authority over the app and its activities. There may be multiple users, but the backend is controlled by a single organization.
Decentralized Apps run on a blockchain network in an open-source decentralized environment in the context of cryptocurrencies and they are free from any kind of control and interference by any single authority. For example, a developer who is pro at android app development can create a Twitter-like dApp and put it on a blockchain can make it available for any user to publish messages. Once posted, nobody including the app creator should be able to delete the messages.
Have a look at Dapp.com’s 2018 market report:
Let’s have an insight into the decentralized apps in detail in this blog.
Features of DApps
Blockchain-based DApps are very popular and in-demand primarily because of three important features which are as follows-
1. Open Source-
The application operates autonomously. The application is able to modify its protocol in response to the proposed improvements and market feedback, but the changes should be decided by the consensus of its users.
DApp creates a new structure for business practices by permitting all the network participants to keep a track of the activities and happenings rather than only one person. They are governed through autonomy and any changes in the DApp are decided through consensus. The codebase of a decentralized apps is available for review.
2. Decentralized Consensus
Prior to the introduction of Bitcoin, a transaction’s validity used to be ensured by some kind of centralization. Making a payment requires a transaction to be pushed ahead through a clearinghouse, ideally the one which monitored it.
However, Blockchain-based decentralized apps work fine on a peer-to-peer (P2P) model, which implies that the nodes are interconnected with each other.
In a DApp, a transaction is processed by a consensus mechanism that requires the approval of the majority of the nodes for being processed. For this process, the validators of the network as well are rewarded in the form of cryptographic tokens.
3. No Central Authority
Decentralized apps don’t depend on a single server as they are decentralized, and thereby, there occurs no central point of failure. Data stored in DApps are decentralized across all its nodes, independent of each other. In case one node fails, it does not affect the other nodes and they run smoothly on the network accordingly.
- Cryptographically Stored
To avoid any critical points of failure, the application’s data and records of operation are cryptographically stored in a public and decentralized blockchain.
- Must Use and generate a Cryptographic Token
The application uses a token native to its system that will be responsible for providing access to the application. The application can also use a standard cryptographic algorithm to act as a proof of value.
Types of DApps-
There are several types of decentralized database systems including Interplanetary File System (IPFS), BitTorrent, independent DHTs, which can be utilized to create Decentralized apps.
Categories of Blockchain-based DApps:
Blockchain-based DApps can be classified into three broad categories:
1. Financial Blockchain Apps
This category of Decentralized Apps provides users with several ways of managing their finances and investment. For instance, Bitcoin provides its users with a much sorted and decentralized system of monetization.
There is no such centralization to the control of the network, and no single authority is there responsible for controlling all the money. The power and regulation remain with the people of the network and the consensus protocol. Users are the absolute owner of their money in these applications. In addition to Bitcoin, there are several other Altcoins that have been created so far.
2. Semi-Financial Blockchain Apps
This category encompasses both money and information that remains outside the blockchain. For example, insurance applications allow a refund for flights in case of a delay in arrival.
Initial Coin Offerings or ICO can be considered another example under this category. An ICO is a fundraising mechanism that is similar to an IPO with the only difference within the involvement of cryptocurrencies.
It is easy to structure the ICO DApps because they apply standards like the ERC20 Token Standard. Most of the ICOs operate by having investors send funds to a smart contract that stores the funds and shares an equivalent value later like in the form of Bitcoin in the case of bitcoin blockchain or Ether in the case of ethereum blockchain.
3. Fully-Functioning Decentralized Apps
This category of DApps combines the features of both decentralized and distributed systems. They are the most preferable type of Blockchain-Based DApps and are not financial at any level. For instance, applications for online voting. Countries like Dubai have already begun constructing the first blockchain-run government.
Advantages of DApps
There is no point of failure because no single node controls the data transaction or data records in the P2P decentralized network. The distributed nature supports this feature very strongly.
2. Internet Censorship control and prevention
As there is no central authority owning a DApps network, it can control and prevent Internet Censorship violations. It’s practically difficult to manipulate the data sets in an individual’s favor. This means that DApps don’t depend on any particular I.P address being decentralized in nature.
3. Increased Trust in the security of the System
Since DApps are not owned by a single entity, users are enabled with more confidence and trust that their valuable data will not be stolen or manipulated.
4. Increased privacy:
Dapps provides increased privacy and improved security than typical applications.
5. Zero downtime:
Dapps are always able to serve their clients after smart contracts are deployed at the basic core of the app and the blockchain.
6. Resistance to censorship:
None of the entities on the network are able to block a user from submitting their transactions, reading data from the blockchain, and/or deploying Dapps.
7. Complete data integrity:
Data stored on blockchains are immutable and indisputable No malicious actions like forging transactions can be taken once they are made public.
8. Verifiable behavior:
Smart contracts are thoroughly analyzed and are guaranteed to work in presumed ways, so there is no need to trust any central authority.
Disadvantages of Using Decentralized Apps
DApps come with their own set of disadvantages.
1. Updates and Bug Fixes are a bit difficult to manage
It’s not easy to fix issues in DApps because fixes basically require every peer in the network to update all their copies in the network, which can be quite a heavy task.
2. KYC is Not available easily
DApps don’t have a single entity that is responsible for doing KYC verification, and this makes it challenging to construct DApps.
3. Complex to Scale
There are complex networks and protocols that need to be implemented in DApps to achieve a consensus for data validation for which the entire DApp needs to be planned properly and built considering the scale from the very beginning.
4. Third-Party DApps
We often need to depend on third-party APIs for fetching the third-party information. However, DApps don’t offer this leverage because currently there is no large third-party DApps ecosystem in place.
5. The user interface remains Less accessible
6. There are significant delays in-app actions
7. Less transparent cost of transactions
8. They are not user friendly and it’s not easy to understand the functioning of Dapps
Adoption of Decentralized Apps by the online industries
Any online industry like gaming, banking, or even gambling industries can easily apply Dapps. The list of Dapps on various cryptocurrency data analytics platforms can be found – to name a few State of the Dapps, Holdex, Dapp.com, CoinGecko, Live Coin Watch, DAppRadar, etc.
Decentralized apps are adapted to the following versions.
- Defi Dapps
- Dapps browsers &
- Gambling Dapps
Decentralized Finance apps or Defi Dapps focus more on the financial sector industries. They perform financial functions on blockchain. Defi Dapps enables its users to
- Go either “long” or “short” over a range of assets
- Borrow money from others
- Earn interest and/ or trade coins in a savings account without any centralized intermediary
Decentralized app browsers
All dapp browsers possess a unique code that runs on a specific platform. Additionally, all Dapps work on standard browsers like Google Chrome, Internet Explorer or Firefox. These are designed to open on specific websites only with customized codes that are adjusted to open a particular type of dapp.
As the name suggests, gambling Dapps are basically designed for the gambling industry. These Dapps allow smoother transactions and lower casino operations costs that result in a reduced house edge for the customer as well as it provides increased anonymity & provable fairness.
Why is Dapps Best for decentralization and Business?
One of the popular uses of Dapps in business is decentralized cloud storage. Some people prefer to store their data on decentralized servers as compared to centralized servers like Google Drive or Dropbox. Files are encrypted and they are accessible only with a private key which is able to provide high security and privacy. Dapps also facilitates the production of music by the musicians and thus gets paid. Similar is the case with other creative fields like writing or entertainment. decentralized apps can further be used to rent an apartment for vacations wherein users need to pay less as compared to other platforms.
Blockchain-based DApps are now considered as a new wave of apps to leverage the ‘blockchain’ technology architecture. Blockchain-Based DApps are connected directly for hosting and proper managing of the code and user data. Unlike traditional apps, no permission is needed for building a DApp, and the rules of the platform cannot be changed by a centralized group of people.
Thanks to blockchain technology, applications have evolved into DApps. Decentralized Apps are undoubtedly the improved version of traditional apps as they have the potential to emerge as self-sustaining resources by permitting their stakeholders to invest in DApp development. DApps are definitely going to be preferred over currently available traditional applications for several aspects such as payments, storage, cloud computing, etc.
Dapps are not being utilized currently to their full potential, but they can grow and expand in the future. Businesses can avail the benefits of this platform to grow as well as expand their services. They can further use Dapps to benefit their business in several ways due to its decentralized nature. If you are looking forward to developing dApps for your business, you can certainly contact our proficient team from the best mobile app development company in Bangalore India. We will help you to get the best business app for you.