What are Dapps?
Decentralized Apps, or Dapps, are applications based on blockchain. Dapps have a front end similar to that of traditional apps. However, the back end of a Dapp is the smart contract running on a peer-to-peer network like a blockchain. This differentiates them from the traditional apps as their back-end is based on a centralized server.
The architecture of Dapps
Front end
We can implement Dapp as a front-end feature in the web and mobile apps. However, web apps are the preferred choice due to the availability of more tools and community support.
The front-end of the Dapp is hosted on a centralized server or a decentralized server like IPFS (InterPlanetary File System). Users from the front end can fetch data from IPFS to display in the app according to the business logic. In addition, users can perform some transactions directly and indirectly (via a wallet) on the blockchain by sending transactions to the smart contract running on the blockchain.
Wallet
It is a cryptocurrency wallet used to interact with blockchains. They connect with the Dapps directly and allow users to perform some transactions on the blockchain.
Back end
The back end is the part that sets Dapps apart from the traditional apps. The back end consists of smart contracts, written in solidity, running on a virtual machine on the Ethereum node. Business logic is implemented within smart contracts. The transactions are verified, validated, and executed when a user initiates a transaction. If the transactions can't be validated, they are aborted, and a notification is sent to the user.
Types of Dapps
The types of Dapps are as follows:
- Type I: Apps that operate on their blockchains are classified as Type I, that is, Bitcoin and Ethereum.
- Type II: Type II apps that operate on top of Type I apps usually enhance the capabilities of Type I apps. Type II apps have their tokens to incentivize the users to contribute to the app. For example, Omni is built on top of the bitcoin blockchain. Omni has its token, and it enhances the bitcoin's limited functionality by adding the capability to add smart contracts.
- Type III: They operate on top of Type II apps. They also enhance the functionality of Type II apps, which they use as their base. They also use their tokens.
Advantages and disadvantages of Dapps
Advantages | Disadvantages |
Decentralization: This eliminates the need for a centralized authority, giving the users more control. | Immutable: Smart contracts are immutable, which means that the app's back-end can not be updated once the smart contract is deployed. Business logic can not be updated, or any error can not be removed unless the majority consensus is achieved. |
No censorship: As there is no centralized authority, no user/content can be censored unless the majority consensus is reached. | Computing power: Most of the Dapps are based on the Ethereum blockchain, which operates on Proof of Work and requires a lot of computational power. |
No downtime: Even if some nodes crash, the Dapps remain online. | Scalability: Transactions per minute are significant roadblocks causing the Dapps to lead to a poor User experience. |
Anonymity: Dapps do not usually require users to go through a lengthy sign-up process, thus keeping the users' identities safe. | Less user-friendly: The end-user might find it difficult to set up the tools required to communicate with the blockchain in a secure environment. |
Applications of Dapps in different industries
- Finance: Cryptocurrency trading platforms like Binance are called Defi (decentralized finance). Defi refers to the applications built on top of a blockchain, using smart contracts to provide transparent financial services. Platforms like Binance use it to enable people to buy and sell cryptocurrencies transparently without the intervention of a centralized authority.
- Gaming: Defi games have been growing tremendously both in number and revenue. They allow players to own the characters within the game in terms of NFT, which they can sell later. In addition, the Defi game's in-game currency is an actual cryptocurrency. These features have created a new category in gaming called Play To Earn, led by Defi games.
- Social Media: Social media decentralized alternatives have been made and are already live, for example, Peepeth. It is a microblogging site similar to Twitter, but this eliminates censorship from a centralized source. Censorship in this Dapp would require the consensus of the majority of platform users, thus giving the power back to the users. Another major issue in Twitter is the bots' use to inflate a trend. Platforms like Peepeth attach a minor cost (GAS fee) to creating a new account, thus making it an expensive endeavor to spam.
Free Resources
