What Are dApps?

Since the blockchain was first conceptualized by Satoshi Nakmoto in the bitcoin whitepaper, uses for the technology have expanded far beyond cryptocurrency.

Dapps — a portmanteau of Decentralized Applications — promise to unlock more of the potential of blockchain by using smart contracts to facilitate more functions of traditional finance, along with some more experimental applications

dApps can be defined as applications with code running on a decentralized peer-to-peer network. dApps use smart contracts to execute commands and retrieve information from the Blockchain.

Smart contracts are simply strings of code executed on the blockchain, that when certain conditions are met, execute certain actions.

From Apps to dApps

The idea of Apps can be traced back to the early 1980s, when Steve Jobs compared buying software to buying records — and suggested creating an “App Store” to help make the process more consumer-friendly.

Since then, apps have taken over the software programmes of yesteryear, and gradually become available on devices of all shapes and sizes.

Most of these apps fall into the category of centralized applications — where all of the data, and the servers, are controlled by one single authority. This might be fine for some purposes, but others could benefit from a radically different technical architecture.

dApps

By taking the same ideas behind centralized applications and developing them on decentralized protocols, dApps aim to bring all the advantages of the blockchain — including greater security, immutability, and transparency — to software. Furthermore, dApps promise the possibility of completely new software models that incorporate cryptocurrency for novel incentive structures.

As an experimental phenomena, there are still various different definitions of what exactly constitutes a dApp.

Some claim, for example, that dApps are nothing new, and have been running for decades on p2p networks. Examples include peer-to-peer file sharing protocol BitTorrent, and anonymous communication software Tor.

What put dApps in the public eye, however, was Ethereum.

dApps on Ethereum

Ethereum — which is currently the third largest cryptocurrency by market capitalization — has risen to prominence as a platform for decentralized applications.

As a blockchain with a built-in Turing-complete programming language, Ethereum provides developers with a foundational layer for programming in its proprietary language Solidity.

This allows anyone with knowledge of Solidity to write smart contracts and decentralized applications with their own rules that can run on Ethereum.

Some of these ethereum-based dapps were first to hit the bigtime and help push blockchain/decentralization into the mainstream.

Decentralized collectibles

Back in late 2017, a new craze hit the Ethereum blockchain — CryptoKitties. This dApp lets users collect, breed, and exchange unique models of cats that fetched prices of up to $170,000 USD when the mania reached its peak.

This simple dApp showed the potential for a decentralized marketplace, and has since spawned a range of copycat apps offering similar “crypto-collectibles”. But, it also highlighted scalability issues with the Ethereum blockchain — causing network congestion as CryptoKitties collectors flooded the blockchain with transactions.

Decentralized social media platforms

As people become more concerned about protecting their privacy and personal data on social media, blockchain-based social media apps have sprung up.

Peepeth, one such dApp running on the Ethereum network, describes itself as “a blockchain-powered social network for our best selves”, and aims to be a decentralized alternative to Twitter that is completely free from censorship. As all user data is secured on the blockchain, it is not possible for it to be controlled by any single company or government.

Decentralized auction houses

Other dApp projects — like Auctionity and Auctionhouse — aim to provide a blockchain-based platform for selling via auction, just like eBay. By translating this concept on to the blockchain, these dApps take advantage of the trustless aspects of blockchain to maintain payment and delivery guarantees, all on a global decentralized network.

Although some of these platforms have managed to garner a significant user base, they are still very much in development, and are limited by the present state of the Ethereum blockchain, which can only handle a certain number of transactions.

With increased competition from other blockchains including EOS and Tron, and the implementation of scaling solutions on Ethereum, we could expect more decentralized applications to be developed in a wide range of different industries — showing the true potential of blockchain technology.