dApps 101: What They Are, How They Work, and Why They Matter?
dApps or Decentralized applications, are software applications built on blockchain technology that operate in a decentralized manner, without relying on a central authority or intermediary. Unlike traditional applications you know and you use every day, they are hosted on centralized servers controlled by a single entity.
The problem with this traditional apps is that they are controlled by a single authority that can censor or manipulate the content and functionality of the app. The entity that owns the app can decide what you can see, do, or say on the app, and can change the rules or terms of service at any time. This can limit user freedom and creativity, and can also create bias or misinformation.
Another problem of this traditional apps is that they are vulnerable to system errors and cyberattacks. If the server goes down, the app stops working for everyone until the problem is fixed.
On the other hand, dApps are open-source, transparent, free from any central authority, resistant to censorship, and the recorded data is immutable, meaning no one can change it. Additionally, as a user, you have full ownership and control over your data.
dApps are more democratic and innovative, as users can participate in the governance and development of the app, and can create their own rules and features.
dApps are more secure and private, as user data is encrypted and distributed across the network, making it harder to hack or access by unauthorized parties.
dApps are more resilient and reliable, as they can function even if some nodes in the network fail or go offline.
How dApps work?
as I mentioned earlier, dApps relies on the blockchain to function, this blockchain can be Ethereum, Solana, Binance Smart Chain etc…, and all of them use smart contract to define the rules of how any given dApp works. So, each dApp to define its rules and governing how it operates, relies on its own set of smart contracts.
Smart contracts reside on the blockchain and operate in a decentralized manner. They play a crucial role in processing transactions within the blockchain and executing their predefined instructions once specific conditions are met.
Smart contracts removes the need to trust a third party because the interactions are automated and based on predetermined rules and conditions coded into the contract.
For example, Metamask is a wallet and also a dApp. When you use Metamask to send your crypto assets from one account to another, the smart contract responsible for this action executes your request on the blockchain in the backend automatically once you provide permission.
To use a dApp, you need a wallet such as Metamask. But why do you need a wallet? Well, dApps cannot execute a transaction without the necessary keys, and you are the sole owner of those keys. Wallets utilize these keys to obtain permission and facilitate the execution of transactions.
dApps use blockchain to function in the backend, but in the frontend, they use the same technology as a traditional application. That’s why you will not notice the difference between them.
But what are the use cases of dApps?
Well, there are thousands of dApps out there, covering various domains such as finance, gaming, media, and more. Here are some examples of dApp use cases that I find fascinating and innovative:
DeFi or Decentralized Finance is a category of dApps that aim to recreate the traditional financial system in a decentralized and permissionless manner using blockchain technology.
dApps in gaming enable players to own, trade, and interact with in-game assets using blockchain technology. They provide unique gaming experiences, play-to-earn models, and provable scarcity of virtual items.
dApps as a social media platform aim to create decentralized alternatives to traditional social media platforms, empowering users with ownership and control over their data and content.
dApps for governance and voting can facilitate decentralized decision-making and voting systems, allowing participants to engage in transparent and tamper-resistant governance processes.
dApps for identity and authentication can offer self-sovereign identity solutions, allowing individuals to manage and control their digital identities securely, without relying on centralized authorities.
To wrap it up, dApps are leading the charge in the decentralized revolution, bringing exciting and game-changing solutions that will shake up the old-fashioned centralized systems. Thanks to blockchain technology, dApps enable direct peer-to-peer interactions, trustless system, and community-driven decision-making. This revolution is sweeping across industries, empowering individuals worldwide and transforming the way we do things.