What is a DAPP? — A look at Decentralised Applications

At this stage you probably know that decentralisation is at the core of what Bitcoin and most cryptocurrencies are about. Decentralisation of power and distribution of it amongst a network of actors is the premise upon which this ecosystem was birthed. This effort to alleviate a centralised entity controlling and maintaining power was set out in the original Bitcoin white paper.

Since then, Bitcoin has given rise to a whole host of new decentralised currencies and projects. One of the natural progressions in this space has been the emergence of decentralised applications, or, DApps. Much of the growth around DApps has come from the creation of Ethereum, the world’s second largest crypto project.

Ethereum itself is a decentralised virtual world computer that allows anyone to run programmes on it and trust the results. This makes Ethereum an ideal platform for creating decentralised applications.

But what exactly is a DApp?

So what is a decentralised application, and how does it differ from a normal application? Well, a Dapp is an application that has its backend running on a decentralised peer to peer network. Normal applications run on centralised servers, and can be susceptible to a single point of failure. Decentralised applications are cryptographically stored on a blockchain to avoid such a single point of failure.

While the idea of DApps is still quite new, they do not really have one specific definition. It is hard to throw shade over everything that encompasses what a Dapp can do. Rather, there are characteristics that can be attributed to decentralised applications, like those mentioned above. Furthermore, the Ethereum foundation has put forth three types of Dapps as they see fit. These are outlined in their whitepaper but we have summarised them as follows:

1. Apps that manage money — These are applications that allow users to trasnact and exchange value in a peer to peer manner with the aid of a blockchain and its intrinsic currency. Bitcoin is a perfect example of this.
2. Apps that integrate money with real world events — This example could make use of real world events that trigger the execution of smart contracts. If certain criteria is met, like the arrival of cargo at a shipping port based on RFID tracking, then a smart contract is triggered and funds are exchanged between participants.
3. Decentralised Autonomous Organisations (DAO’s) — Put simply, DAO’s are leaderless organisations on the blockchain. DAO’s run on a set of pre programmed rules that control how members can vote and how to release company funds.

Benefits of Dapps

Decentralised applications have a number of advantages over traditional centralised apps.

1. Security — As we mentioned above, Dapps are created on a decentralised network and therefore have no single point of failure. They do not rely on one server to maintain uptime. Blockchains are also trustless and immutable by nature thereby securing the validity of the data associated with the DApp being built upon it.
2. Integration with Cryptocurrency — Dapps are easy to integrate with cryptocurrencies and can therefore incentivise users to mine and earn coins from using them. Dapps can also create their own unique tokens. Those on Ethereum, can use the ERC-20 standard to seamlessly create their own token based on the Ethereum blockchain.
3. Resistant to external Intervention — The decentralised nature of Dapps, and the fact that they can have pre programmed rules in place, means they are naturally resistant to external actors. They are essentially unstoppable applications that cannot be corrupted by corporations or governments.

The Future

We are still in the very early days of Blockchain technology and Decentralised Applications. Ethereum is currently the go to choice for many DApp developers. However, there are plenty of other projects like NEO, ICON, Cardano and Lisk that are building out Blockchains that can host DApps. It will be very interesting to see how this field grows within the Blockchain industry and what killer DApps will emerge as market leaders and grab the attention of the masses.

Originally published at cryptosuss.com on September 21, 2018.