Why do we need dApps?

Blockchain and cryptocurrencies are here to stay, especially as many across the world continue to get involved with both industries and consider how cutting-edge tech can influence traditional industries. 

Decentralized applications (dApps) are one of the most influential tools to have emerged out of the world of blockchain. Instead of a centralized network or server, dApps are based on blockchain technology and smart contracts so they are not managed by a single entity. As a result, dApps do not have a single point of failure.

The transformative nature of dApps has helped revolutionize many industries and has helped introduce concepts like blockchain and smart contracts to new industries to promote efficiency and convenience.

Bitcoin house icon
Bitcoin house icon

Research after the first three months of 2022 revealed the dApp industry, at the time, had reached about 2.38 million daily active wallets.

While the figure was a 5.8% drop from Q4 2021, the Q1 2022 stats were impressive amid turbulent crypto markets, the impact of the Ukraine-Russia war, and general economic uncertainty. 

The Case for Dapps

As of mid-June 2022, there were about 4,070 Decentralized applications (dApps) with a scope ranging from gaming, gambling, governance, identity, finance, media, and more.

Even amid crypto’s sustained bear market in 2022, dApp games continue to remain popular. Research from the end of June found how crypto game usage remained at about 1.15 million unique active wallets per day from November 2021.

Security, Security, Security

dApps offer significant security benefits over centralized apps due to the immutability and transparency of blockchain technology. Blockchain transactions are unable to be altered or edited and can be reviewed by anyone interested in a paper trail. Additionally, the lack of a single point of failure among dApps boosts dApp resiliency and mitigates the risks of hacks.

Resisting Censorship

dApps are censorship-resistant as there’s no central authority to govern who uses the app and how interactions take place. Blockchain systems guarantee rules governing a particular protocol are fairly applied to everyone. The mitigation of censorship is one of the biggest advantages dApps have over centralized apps. Learn more about the differences between dApps and centralized apps.

Full Trust

dApps users can have full trust in the network as code governs the infrastructure, not an outside third-party or central figure.

Say Goodbye To Downtime

As dApps do not have a centralized server, it’s impossible for the entire network to fail or go down at the same time. The network can still continue even if a portion is temporarily knocked out as it’s distributed across user computers.

Dapps In Action

Finance

dApps have gained prominence in the financial sector as the lack of a third-party figure means transactors can save money on fees by directly engaging with each other. Lenders can also collect 100% of the interest they charge as they do not need to pay an intermediary.

Social media

Many believe dApps have a strong future in the social media realm as their distributed nature means it’s impossible to censor, edit, or manipulate posts and content. Influencers can also keep all the funds they earn and not have to send a portion to a third party.

Gaming

dApp games like CryptoKitties have gained prominence due to the fact that users can buy, sell, and trade tokenized assets and then invest time into building their portfolios.

Voting and governance

Many believe governance measures will become vastly easier through dApps as smart contracts can govern the entire process to promote a transparent and fair voting process. Blockchain’s immutability also ensures votes in a decentralized network are unable to be manipulated. Some platforms also offer incentives for users to participate and vote on governance measures.

Fundraising and Advertising

dApp users can potentially surf the web and use platforms while contributing to entities they want to support through browser-based dApps. Many are optimistic in this realm as users could still maintain control over their privacy while supporting creators and websites.

What are the benefits of using Dapps vs apps?

There’s a number of advantages of using a dApp vs. a centralized app. Here’s a short list.

Autonomy: Unsurprisingly, autonomy ranks as the largest dApp advantage. Users of centralized applications need to trust the controlling entity enough and be comfortable sharing potentially sensitive data and information. With dApps, the structure means users can operate the app without having to trust a third party, which promotes autonomy, economic self-sufficiency, and innovation.

Transparency: Every bit of dApp code is designed to be open-source, which means anyone is able to view the code on their own accord and verify the platform, and the promises made by developers. Info on dApps is not able to be hidden due to blockchain technology.

Data Security: Centralized applications store data in a singular place, which means users need to trust security measures from the third-party. A hacker can gain access to massive amounts of information if they are able to break into a central repository. In contrast, dApps are built on a shared, secure, and immutable database that replicates stored information. Information is protected, can never be lost, and a hacker does not have a single point of failure to exploit.

Flexibility: As dApps do not need to access a single server to run, they are inherently more flexible than centralized tools. Large businesses and enterprises can rely on the distributed nature of dApps to keep processes flowing without having to worry about a silo or single point of failure hindering or stopping operations.

Censorship-Resistant: It’s easy for companies or governments to make moves to block centralized applications. As dApps do not have a particular IP address, it is much harder for officials to try and block a dApp and prevent people from using one.

What are the issues?

Cons of using dApps over centralized apps include

Development Difficulties: The complex nature of dApps and their status as a novel technology can make them challenging to develop. Their distributed nature also makes troubleshooting and updating tricker since all involved with the network will need to update node software.

Security Challenges: While dApps are much more resilient than traditional apps from a security perspective, they do bring their own challenges as typical security solutions will not be effective if there is an issue. Developers will need to find the right experts and tools for dApp-specific issues and make sure any security solution is adaptable for a decentralized environment.

Access Issues: Many people understand how to use a username and password to log into a centralized application. Fewer, especially those unfamiliar with crypto and blockchain, might know how to use a public and private key to gain access to a blockchain-based dApp. This could pose a challenge to developers looking to onboard new users.

Slow Speeds: While dApps have many advantages over centralized tools, payments can still take time to process and the apps themselves can run into loading issues. As many people in the crypto world are used to ‘near-instant’ results, slowdowns can lead to frustrations and lack of adoption.

Why Are DApps An Opportunity For Developers?

dApps are one of the most exciting fruits of the rapidly-growing and energetic blockchain ecosystem. dApps have a wide range of use cases and are making appearances in everyday life more and more as those across the world understand their vast potential and utility. 

Decentralized Applications: The Good, The Bad, And Why Should Enterprises Care?

As dApps continue to gain a foothold within DeFi, especially as DeFi coins help provide greater utility to the general decentralized finance world, developers and anyone interested in dApps needs to understand their pros and cons. 

It’s important for enterprises to remain interested in dApps because they can be used in essentially any industry and are not much different than centralized apps, aside from a few key advantages. dApps have already made waves in the supply chain industry to promote transparency, and within the medical field as a tool to help securely share data.

Thesee tools also open up immense passive income opportunities. There’s many avenues to make money with dApps.

Business dApps: The Good

dApps have made particular inroads within the business world in the cloud storage realm. Decentralized file storage is ideal for sensitive information like medical or financial records as a third-party platform does not have access to details.

Conclusion

It remains abundantly clear that dApps will transform many facets of society and perhaps make some traditional tools and practices obsolete.

As dApp developers continue to build and innovate, it remains vital to have a firm grasp on their pros and cons to ensure the technology has a future where adaptation can overcome pitfalls and roadblocks.

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Kevin OBrien
Written by Kevin O'Brien verified symbol Web3 & DeFi Writer
16 Articles

Kevin is a native Texan focusing on DeFi, Web3 & NFT content. He’s written for Bitcoinist, CCN, CryptoGlobe and for a wide range of crypto projects. Kevin also enjoys collecting historical autographs and learning traditional musical instruments. Read more at texandefiwriter .com.

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Reviewed and Fact Checked by Eugene Abungana , Investment Analyst, Financial Analyst, and Institutional Trader