Decentralized Apps (“Dapps”) are essentially software that interacts with the entire blockchain and acts as a manager to the state of all network actors. Smart Contracts are written into the blockchain such that they collect information from external sensors and help manage the network actors. These smart contracts form the logical core of any Dapp.
Dapps are changing the way we utilize our devices and the value we create using them. Imagine a case where you get paid for browsing the web as well as taking ownership of the attention to pay.
Dapps are a very nascent phenomenon and hence it might not be possible to provide a single definition of Dapps. However, all Dapps have certain noticeable features:
1. Decentralized: The first and most key feature to these apps is the fact that these are decentralized in nature. What this means is that the records of the apps are available on a public ledger for the public to observe and analyze.
2. Open Source: The open-source nature of these apps means that any change in the apps must be decided by consensus and should be agreed upon by the developers and users alike. Further, the user should be able to verify the code.
3. Protocol: The algorithm to show proof of value shall be ascertained and agreed upon by the community. Bitcoin uses the Proof of Work mechanism whereas Ethereum plans to use a hybrid between proof of work and proof of stake.
4. Incentivised: Validators of the blockchain should be given an incentive in terms of cryptographic tokens for their work.
5. Cryptographically Secure: The application has to be cryptographically secured such that it should be safe from attacks by hackers and malware to a reasonable degree.
While Bitcoin can be considered the first Dapp ever, Ethereum is a more advanced technology that allowed the developers to run Dapps on top of their own platform. Ethereum Developers can code smart contracts on Ethereum, which serves as the blueprint for the Dapp.
There are various Blockchains that are available for developers around the world to build their projects on. Some of the most famous names include Ethereum, EOS, TRON, NEO, and STEEM. IOST, LOOM, ONT, ThunderCore, VeChain, Tomochain, Waves, WAX, and many other Blockchain protocols have also joined the wagon with different consensus protocols.
Practical Applications of Dapps
If we are to think of the practical applications of Dapps, we have to see what sectors and fields these applications can be applied and used to gain optimal results. We are to look at history, Bitcoin and Ethereum make up excellent examples of financial use cases of Dapps. The underlying blockchain technology means that these apps can maintain a self-sustaining public ledger. Following are some segments in which Dapps can be successfully operationalized:
1. Money Market and Transfer: Given the decentralized and independent nature of these apps, the apps can be used to smoothen financial transactions and cryptocurrencies such as Bitcoin stand testament to it. By eliminating middlemen, the transfer, lending, and management of money can be sped up and the security can also be enhanced.
2. Decentralized Autonomous Organisation (DAO): DAOs are essentially leaderless faceless organizations running on the basis of predefined rules that are written into the blockchain. This would include things such as who can become a member, how will the voting structure works and how will the value of the token be exchanged. This organization can have a worldwide application and can operate without any trouble riding the blockchain bandwagon.
3. Business Process Management: The Dapps can be employed by the companies to streamline the processes that are used by the company right from the point of manufacture of a good or receiving an order till the point that the delivery is completed and payment is collected. One use case is the supply chain management use of blockchain which will be based on Dapps. A simple example of this is the integration of RFID chips into the shipment so that it can be scanned at the delivery point. This, along with a smart contract that would ensure payment is made as soon as the shipment is scanned would increase the efficiency of the entire process.
Major industrial sectors that DApps have disrupted are Games, DeFi (Decentralized Finance), Gambling, Decentralized Exchanges (DEX), Collectibles, Marketplaces, Social Media, and other high-risk divisions. The primary purpose of using DApps has still been the decentralization of governance and automating multiple processes with the help of smart contracts to reduce the number of middlemen.
The following are certain real-world examples of Dapps that have been able to create a real impact in their sector:
· Augur: Augur is aimed at creating a foolproof forecasting tool for the markets which tries to blend prediction algorithms with decentralized networks.
· Status: Status is a peer to peer network where users can send each other payments and enter into smart contracts. It also provides the users with a messenger system that avoids problems like server downtime as all of it is based on the blockchain P2P network.
We can see, Dapps provide a decentralized platform, having certain basic features such as an open-source code and a protocol to show the proof of work to the community. These apps take away the need for a centralized system and thus gives control in the community that uses the app. Further, since the consensus mechanism needs the approval of both the users and developers, the demands of both these communities will be adequately represented. Dapps have use cases in various fields, be it money markets or business management. With precedents like Bitcoin and Ethereum, Dapps have a wide variety of applications and can change the market scenario.