Dapps — A Promising New Alternative To The Current Model
The whole ecosystem is evolving at the same time as the world adjusts to conventional mobile apps. The decentralized application or dApp is a new type of application that is not controlled or owned by a single authority, cannot be shut off, or cannot sustain downtime.
A blockchain-enabled technology is one of the things that will enable decentralized applications (DApps). For a better understanding of how DApps differ from traditional apps, consider an app that shares these characteristics:
- It cannot be turned off
- No downtime occurs.
- Resist cyber-attacks more effectively
- No one owns them.
We may be able to transform the way we work, communicate, commute, and much more through the use of DApps. As a consequence, DApps have the potential to revolutionize the internet. According to data released last year, there were nearly 4,000 DApps and 162.73k daily active users.
DApps are still in the early stages of development. Decentralized applications are difficult to define in a single sentence, because there is no specific definition that encompasses all the aspects that define such applications. In order to qualify as a dApp, an application must exhibit the following four characteristics:
Open Source: This refers to the fact that such applications should make their source code available to the general public. As the core characteristic of dApps is autonomy and unanimous consensus, essentially the changes must be decided by all or the majority of the users. Also, the code should be available to everyone for checking out.
Decentralization: As the name implies, decentralized applications are based on decentralized blockchains or any cryptographic technology to safeguard the application against risks associated with centralized authority and to emphasize its autonomous nature.
Providing incentives: Since the app is based on the decentralized blockchain, the validators of the records on the network should receive cryptographic tokens or any other form of monetary incentive.
Algorithm: It is necessary to design a decentralized application that has a consensus mechanism that exhibits proof of value in the cryptographic system. Fundamentally, this creates a consensus protocol that users agree upon to generate useful cryptographic tokens and endows value to the cryptographic token.
As we have now identified the characteristics of the types, we can propose a definition that will help us identify examples in the real world. Basically, a dApp refers to an application that runs on a decentralized P2P network governed by all its members instead of a centralized authority.
Does dApps have a place in the real world?
Our dApp discovery process used the above definition to find that the first known decentralized application (dApp) was Bitcoin. Bitcoin is regarded as the most important cryptocurrency because it solves the problem of centralization and enables users to conduct transactions without a middleman or central authority by using a self-maintaining public ledger. With regard to the use cases of decentralized applications, we can classify these apps according to the scenario in which they are useful. As a result, these dApps can be categorized into three segments that are also their potential use cases:
Managing funds and transferring funds
It is possible to use decentralized apps to smoothen the process of money transfers from one country to another. Those benefits have already been seen in the success of bitcoins and other cryptocurrencies, which have already demonstrated the benefits. With the use of blockchain networks and crypto tokens, digital payments are able to accelerate money management, transfer, and lending by eliminating middlemen and enhancing security due to the fact that a consensus mechanism cannot be changed without the approval of a majority.
Management of Business Processes
The idea of integrating decentralized applications to streamline processes without human intervention is becoming increasingly appealing to companies. Using smart contracts — an essential part of the blockchain network that can resolve critical issues and increase the efficiency of processes — critical issues can be resolved and enhanced. A logistics company could, for instance, integrate RFID chips in their shipment that can be scanned at the destination ports and when the payment for the shipment is made automatically through a smart contract between a buyer and seller.
DAO (Decentralized Autonomous Organization)
The Decentralized Autonomous Organization (DAO) is a brand new phenomenon that uses nearly no leaders and starts faceless organizations. In some cases, these organizations operate at the corporate level and can run based on a set of rules defined via programming languages on the blockchain. On the blockchain that will run the organization, everything can be programmed on how members will vote, what business segment the organization will operate in, who will be eligible to become members, how the token value will be exchanged, etc.. It is obvious that these organizations cannot stop once they have been deployed, and they can run worldwide without any trouble riding on the blockchain network bandwagon.
DApps are a promising alternative to the current status quo, but the market is still in the early stages of maturation, and it might take some time before we see DApps becoming mainstream. The adoption of decentralized applications as the norm requires a paradigm shift, and to achieve that, the major tech players need to provide support. In my opinion, DApps are the future, but it’s difficult to say how far off that future might be. DApps are sure to lead to greater transparency and privacy on the internet, both of which are critically needed now that more organizations are digitizing their business operations.
In conclusion — DApp technology has many advantages, such as its robustness and capability, as well as its low cost and ease of implementation. Market volatility may be apparent in the short term, but in the long term, now may be a great time for investors to dip their toes into the market.
TEAM ALPEX Global