DApps: Crypto Basics For All Part 1
What are DApps?
When technology starts respecting user privacy and is willing to decentralize the control of the data generated by humans securely and with the required transparency, the whole of humanity is bound to benefit for good.
DApps are the true technology that harnesses the power of decentralization beautifully to serve end-users with the required sensitivity and security. DApps are expanded as Decentralized Applications which are built on the top of Blockchain.
What Are DApps?
A dApp has its backend code running on a decentralized peer-to-peer network. Contrast this with a normal app where the backend code is running on centralized servers.
Blockchain-powered decentralized apps are similar to the current mobile or web apps we use everyday and only differ in how you transact or communicate over the blockchain network. Here the data being transacted is no longer controlled by big any single entity, middleman, or enterprises rather it is being distributed over the decentralized network of millions of nodes keeping user records and identity immutable and secure.
The main difference between conventional web or mobile apps and DApps is that DApp’s run on distributed and immutable blockchain networks rather than a centrally controlled operating system/server. This power of immutability makes DApps free of any censorship
Special Attributes Of DApps:
Some of the amazing characteristics and properties which DApps hold are what make them special. Let’s list down some of them and discuss them briefly
Censorship Proof :
If you are using a decentralized app, as a user your profile or account can’t be blocked by anyone in the blockchain network as it is not controlled by any central authority or any owner.
Let’s understand it with one more example:
If you are using Facebook-like dApp and publish messages in the app network. Once posted, no one, including you, cannot delete those messages.
DApps needs to be open sourced and the code base must be available for the developer community. Having said that, any updates being pushed in the open sourced DApp code must be done through a consensus mechanism that amounts to some form of majority vote rather than by a developer.
As it is a decentralized app, DApps data which is obviously anonymous must be stored on an immutable, public blockchain.
Secured Cryptographically :
Dapps offer Complete data integrity. Data stored on the blockchain is immutable and indisputable, thanks to cryptographic primitives that ensures that hackers/attackers can’t forge your transaction without your consent. You authorize dapp actions with your DApp user account usually via your wallet, so that your credentials remain safe .
As dApps user your real world identity is never revealed and you can stay anonymous while transaction in the DApp.
Get Incentivised :
Validators in the Blockchain ecosystem are incentivized through tokens generated in DApp’s.
DApp’s With Zero Downtime:
DApp’s are hosted on the decentralized blockchain platform like ethereum, polygon, which ensures high level of availability 24x7. The chances of the blockchain platform like ethereum being hacked or suffering a downtime is an extremely rare event.
How Does DApp’s Work ?
DApps backend code are hosted and run on the decentralized network like Ethereum blockchain for data storage and smart contracts for their app logic.
Here smart contracts is a set of protocols which lives on the blockchain publicly to be viewed and executed based on those set protocols. Smart contracts facilitate agreements and transactions as a trusted mediator. The real reason why DApps are able to be decentralized in the given blockchain network, is the intelligent smart contract which holds the logic to control the DApp’s transactions.
As covered above, smart contracts lie at the core of Dapps success. Let’s understand more about smart contract
What is a Smart Contract?
A “smart contract” is simply a code piece that runs on the Ethereum blockchain. It’s a collection of functions and data (its state) that resides at a specific address on the blockchain platform like Ethereum.
Smart contracts are a kind of Ethereum account. This means they have a balance and they can send transactions over the network. However they’re not controlled by a user, instead they are deployed to the network and run as programmed
We will learn more about Smart contracts and how it works in our upcoming piece in this series of Crypto basics, as it is out of scope for this article.
DApps Use Case & Examples :
DApps can run everything from games, NFT, Collectibles and marketplaces to decentralized finance (DeFi) lending platforms. Some of the popular example of the same are
DApps Example :
- UniSwap : Decentralized Trading Protocol
- Aave: Open sourced liquidity protocol
- 1-Inch: Most Efficient DeFi aggregator
- Audius: Giving everyone the freedom to distribute, monetize, and stream audio
- Rarible: is both a marketplace for those assets, as well as a distributed network built on Ethereum that enables their trade without a middleman.
We will discuss the most fundamental unit of blockchain network called “Nodes”. I feel it is imperative that one should understand the importance and functionality of nodes if one want to learn more about crypto basics. Also we will cover
- AMM’s : Automated Market Makers
- Smart Contract
- Yield Farming
- Cloud Mining
- Pool Mining
- NFT: Non Fungible Tokens and many more crypto concepts.
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