Definition of dApps
Decentralized applications are digital applications or programs that exist and run on a decentralized blockchain or P2P network of computers instead of a single computer and are outside the purview and control of a single authority. A dApp could be a mobile app or a website. The distinction between a dApp and a conventional application is that it’s built on a decentralized network. For example, on the Ethereum network, when you are creating smart contracts, you write the back-end for the dApp. dApps do not need a central authority to function: They allow direct interaction between users and providers.
Significant Features of Decentralized Application (Dapp)
First of all, dApps run on Ethereum blockchains;
Secondly, their code is made open-source and operates autonomously without any person or group controlling the majority of tokens;
Thirdly, they generate dApp tokens to provide value for their contributing nodes, and users are granted access in exchange for tokens;
Lastly, miners are rewarded with tokens when they successfully contribute to the ecosystem.
Two Main Types of dApps
1. Applications that integrate currency with external, real-world events
For example, a logistics company may use an RFID chip location to determine whether a cargo shipment has reached a port and release the shipment payment. If both the buyer and the seller enter into a smart contract, this could even be accomplished with funds on the blockchain without human intervention.
2. Decentralized Autonomous Organization (DAO)
DAOs are decentralized, leaderless organizations on the blockchain. The concept of DAO begins from programmatically defined rules about what entities can be members, how members can vote, what businesses or activities they can engage in, and how tokens, funds, or value are exchanged. Once deployed, dApps operate autonomously according to their rules. Their members can be geographically dispersed anywhere.
Benefits of Decentralized Applications dApps
dApps essentially allow all of the back-end code and data to be decentralized and hence immutable and tamperproof. Considering the nature of these decentralized applications coupled with the mechanisms that secure blockchain data, dApps have a wide array of use cases.
- Payment processing:There is no need to integrate with a fiat payment provider to accept funds from users, as users can transact directly using cryptocurrencies.
- User credentials: With a public and private keys system, users can transact and bind their user sessions and metadata easily and with varying degrees of anonymity, without the need for lengthy sign-up or registration processes.
- Trust and auditability: Users may assess and understand the open-source dApp code. Such transparency and the inherent security of the enclosed data generate confidence in the applications. A public record on the blockchain also makes transaction information easy to audit by users or third parties.