Decentralized applications, or DApps, are applications that run on top of a blockchain network. DApps use smart contracts that act as a set of rules enforced by code on a decentralized network, not a centralized system like a regular app would. This makes DApps transparent, decentralized and less vulnerable to fraudulent actions.
Decentralized apps use a source code that is accessible to the public, meaning anyone can use, change, copy or verify the code; there is no one entity in control of tokens. Data is stored cryptographically on a public blockchain that is maintained by multiple blockchain nodes. DApps are tokenized systems, meaning they can use a consensus algorithm to generate native tokens or adopt other cryptocurrencies. These tokens can also be used as a reward for mining or staking.
Benefits of Decentralized Applications
Web apps store data on centralized servers, putting them at a higher risk of data leaks or theft. DApps are less vulnerable to these risks because there is no one point of failure. Users also have more control over the information they provide, DApps do not require any personal information to use. Users can link their crypto wallet to a DApp and control what information is shared. Cryptocurrencies can also be easily integrated with the use of smart contracts.
Downfalls of Decentralized Applications
DApps are still in the beginning stages of development and will need some revision over time, such as bug fixes and code updates. They also require a large amount of computing power and could overwhelm their networks, leading to network congestion. It is also difficult to change a DApp after it is deployed because it would require the majority of the nodes to agree to the change, which can be timely.
Decentralized Applications Use Cases
GameFi DApps allow players to have full control over their in-game assets and can even monetize those items in the real world. There are also play-to-earn games that can be used to obtain cryptocurrencies.
Decentralized finance and exchanges can also benefit from DApps because traditional financial institutions rely on a centralized authority. DApps cut out the middleman, allowing users to have full access and control over their assets.
DApps can also allow communities to be more involved with the decision-making process by the use of smart contracts. Users can hold governance tokens that can be used on a particular blockchain to cast votes anonymously.
As the functionality and interest of DApps evolve, more groundbreaking use cases will come to light.