What Is a Decentralized Application (dApp)?

A decentralized application, also known as a dApp, is a program built on a decentralized network using blockchain technology. Decentralized applications combine the power of smart contracts with user interfaces to enable people to utilize blockchain technology in new ways. dApps are not controlled by a single authority; their rules are enforced by the network that maintains the blockchain.

This article provides an overview of what decentralized applications are, how they differ from traditional computer applications, examples of dApps, the pros and cons of dApps, and how to invest in decentralized applications.

What is a dApp?

What is a decentralized application (dApp)?

A typical web application is controlled by a single permission. May keep source code private. You may host your app on your own servers. And permissions control who uses it and how.

Distributed applications run on distributed networks. The source code resides on the blockchain, and every computer on the network or node maintains a copy of the blockchain. This means that anyone can see the source code and anyone can use the application. The immutability of blockchain also means that it is difficult to change applications.

example

Decentralized application example

Developers have built hundreds of decentralized applications across a variety of sectors, including finance, gaming, and media.

Here are some examples of distributed applications.

• Uniswap. A decentralized exchange that allows users to exchange one cryptocurrency for another without a central intermediary.
• Ave. A protocol for lending, borrowing, staking, and earning interest on cryptocurrencies. Aave creates liquidity for other decentralized finance (DeFi) apps.
• crypto kitty. A blockchain-based game where users collect, breed, and sell non-fungible tokens (NFTs) depicting cats.
• Stemit. Blogs and social media applications. Users can earn their native currency, Her STEEM, by publishing and curating content.
• High seas. NFT trading marketplace.
• Audius. Music streaming application. Streaming rights are owned by the user who holds the NFT representing the audio file. Every time someone streams the track, the rights holder gets paid.
• Maker Dao. Allows users to stake their assets Ethereum (Ethereum 1.38%) Tokens in exchange for a line of credit. They can access credit in the following ways: Big (Big 0.0%) Stablecoin pegged to the US dollar. This allows people to access the value of their cryptocurrency holdings without having to liquidate or pay taxes.

Advantages and disadvantages

Advantages and disadvantages of decentralized applications

Decentralized applications have several advantages and disadvantages compared to centralized applications.

advantage

• privacy. You don’t need to provide any identifying information to use most dApps.
• safety. Because data and applications are stored on the blockchain, malicious parties cannot modify the data or generate fraudulent data in bulk. The only way to interact with the blockchain is through the private key.
• Open. Decentralized applications can be used by anyone in any way that suits them. dApp creators cannot censor or block users. (In some cases, this may be considered a disadvantage.)
• There’s no downtime. Since the application resides on a distributed network, dApps do not have a single point of failure. As long as at least one node is working, the dApp is available to anyone who wants to use it.

Cons

• Difficult to scale. Blockchains are limited in the number of transactions that can be performed per second. For example, the Ethereum network can only process about 30 transactions per second. Solana (sol 3.75%) supports up to 50,000 transactions per second.
• Difficult to use. Decentralized applications typically require technical know-how and additional tools beyond a simple web browser or mobile app. Creating a simple user interface can prove difficult and hinder applications seeking mass adoption.
• Difficult to maintain and update. Data on the blockchain is not intended to be changed. Since the dApp code resides on the blockchain, it is very difficult to update the functionality of the dApp.

Related investment topics

Investing in dApps

Investing in decentralized applications (dApps)

There are two ways to invest in decentralized applications.

An easy way to invest in dApps is to buy the native tokens of the applications you are interested in. For example, if you think that more and more people will start using Uniswap to exchange tokens, Uniswap protocol token (Uni 1.89%).

Alternatively, you can invest in blockchain native tokens designed to support the dApps you are most interested in. Ethereum tokens are one example, as Ethereum is the most popular network for building dApps. Matic (Matic 1.71%) is used to power Polygon’s blockchain, which is built on Ethereum, and aims to improve various areas where older blockchains fall short, especially dApps.

As with most industries, there are multiple ways to invest in the success of a single product, service, or idea. It is important to do research to determine how each unique cryptocurrency is affected by changing trends and how people use the currency. As with any investment, be sure to know the risks before investing your money.