Decentralized Applications

What Are dApps?

Decentralized applications are blockchain-based apps that are powered by smart contracts. This concept was initially popularised by the Ethereum network but has grown far beyond a single network. Most dApps are, however, built on the Ethereum network. It functions as a regular application and provides much more in terms of feature settings.

We all know that a central authority like a bank powers traditional financing. dApps introduce a fresh way of conducting transactions, and interactions with personal finances as a single authority does not control it but rather exists as a peer-to-peer network of many computers instead of just one.

Cryptocurrencies and blockchain have become major representatives of the future of financing. dApps contribute to normalizing and facilitating the realization of this idea. Not only are dApps used in the world of finance, but they are also popular entities in gaming and social media.

Understanding dApps

Most popular web applications such as Twitter run on centralized servers operated and owned by a single organization. This organization has full authority over all the operations and functions of the app. Although there are many users, the app is entirely controlled by one entity.

dApps differ from these applications because it runs on a blockchain or peer-to-peer network. Examples of such decentralized apps include BitTorrent, Popcorn Time, and Tor. These apps run on the basis that many users and participants can upload and consume content and thereby determine the app's functionality.

DApps that involve cryptocurrencies operate on a blockchain network in a decentralised environment that cannot be controlled by one single authority. For example, a decentralized version of Twitter might exist as a platform where anybody can publish content that cannot be removed by anyone, including the platform's creators. Content on decentralized platforms can only be removed when a voting system determines it should be. This gives the control back to the people.

The History Of dApps

Bitcoin is the common network that comes to mind when we consider blockchain networks, but blockchain technology has matured far beyond a single network. The creation of Ethereum envisioned a much larger scale of decentralized living.

Buterin had its sights on creating a blockchain-based internet where companies do not control what could be published. Instead, this control is granted to the users. Ethereum is responsible for powering smart contracts. Smart contracts are essentially unshakeable as regulations are built into the system's code. This implies that transactions can be made in the absence of centralized platforms such as financial institutions as an intermediary.

What Is A Smart Contract?

Smart contracts are contracts with terms that have been agreed on by both the seller and the users and are written into the line of code of the network. This code is present in all aspects of the decentralized blockchain network and controls the execution of transactions, including making transactions irreversible and trackable.

Smart contracts see to it that anonymous parties can make transactions without the inclusions of any central authorities, external forces, or legal systems.

A paper by various authors, including Shawn Wilkinson and David Johnston, was released in 2014 and outlined the basics of decentralized applications. This paper defined dApps as having the following qualities:

  • dApps must be controlled by the user and have an open-source code where external entities cannot intervene.
  • dApps must have a blockchain network where the public can access all information.
  • dApps should include a form of a cryptographic token or coin that can also be used to reward participants and those that contribute to the currency.
  • A consensus method must be instated in dApps that can be used to generate tokens. Examples include a proof-of-work consensus.

The paper explains that there are three "layers" to dApps based on the interaction methods between the network and the users.

The First Layer:

This layer includes dApps that exist on their own blockchain network. Popular projects such as Bitcoin fall into this category. A consensus algorithm and written rules are needed for this layer to function.

The Second Layer:

This layer is built on the first layer. It utilizes the previously mentioned blockchain to introduce tokens as a way of interaction. An appropriate example of a layer-two dApp is a scaling solution built on Ethereum. Transactions can be processed on the second layer, alleviating some of the load on the main chain.

The Third Layer:

Layer-three dApps often consist of information needed for the other two layers to interact with each other. The third layer is built on the second and may store the application programming interfaces. A layer-three agreement could host numerous layer-two dApps and improve the overall user experience.

According to the paper, if a central blockchain powers applications, they are classified as dApps.

Advantages Of Using dApps:

Of the many advantages that dApps have over centralized networks, the absence of a third party is the main benefit. Due to smart contracts, it has never been easier to move money without delay and without additional fees that bank transactions would have included.

Using decentralized applications to send money is much more practical due to the time and money-saving aspect it offers.

Because dApps don't operate on centralized platforms, they are available for access around the clock, and transactions can be made instantly any time of the day or night. The fact that they are vulnerable to attacks is actually advantageous because no physical device can be targeted, which minimizes security risks and protects your digital assets.

dApps apply to almost all industries, including the medical, gaming, and governance industries. They can even be used for file and data storage.

The internet used to be a place where people could access any information. This principle was corrupted when large companies started centralizing the web, requiring our personal information to give us access to information and selling it for a profit.

When these companies hold information about the users' likes and dislikes, they can choose what to show and sell to them. They can decide what information you are allowed to access, and they exercise their control in this way. DApps allow you access to information without having to sacrifice your privacy.

Trust has been violated by companies that sell usernames and passwords. With dApps, this concern is resolved in that the user can share information and choose who sees it and for how long they have access to it.

The privacy factor has probably become the most significant selling point of dApps. Smart contracts even allow for anonymous transactions to take place where no participating party is required to give personal information. If dApps are developed as social media platforms, free speech can be reinstated as there will be a lack of censorship that so often limits truth-telling on social media.

Disadvantages Of dApps

Despite the major strides that dApps has made to lessen the control of corporations, certain issues remain unresolved.

Because there is no central authority, changes on the platform and updates might commence slower. Centralized systems can so easily just update their app without batting an eyelid. A dApp, in contrast, needs a majority consensus which can take up to months because of the debate that might arise regarding the changes.

Another limitation in the success of dApps is that it needs a larger amount of users to operate efficiently. For the time being, it is still relatively difficult to access dApps and get the necessary support.

Currently, users have to download a browser that supports the use of a specific dApp. This might change very quickly, however. The majority of people do not yet possess the tech-savvy abilities to solve such problems for themselves.

Because dApps are still in their early stages of development, there are some concerns about whether or not they will be able to scale appropriately. This is especially applicable when an app requires remarkable computations that may overload a network due to network congestion.

The competition between centralized networks and dApps is very weighty concerning the user-friendliness of the platforms. dApp developers will need to prioritize user experience to triumph over established programs.

According to developers, the codes published to the blockchain on dApps are tough to modify. This brings about some problems when changes need to be made to correct bugs or improve systems.

For The Sake Of Diligence, Let's Weigh Up The Pros And Cons.


  • DApps can be developed on a flexible platform
  • Withstands censorship
  • Promotes privacy of the user


  • DApps struggle to develop a user interface that is easy and simple
  • Code modifications cannot easily be made
  • May not effectively be able to scale

World Wide Uses Of dApps


With banks, there is a general injustice when it comes to interest rates. When a person manages to save a lot of money, they and the bank earn interest. The bank, however, earns more than the account holder. That doesn't seem fair, does it?

Because there are no intermediaries involved in dApps, moneylenders can earn the full amount of interest because nobody else needs to get paid. Lenders hereby maintain control over their assets in that they choose whom to lend on while earning tokens.

Those who wish to borrow money on dApps have a much bigger say regarding the interest they want to pay. A discussion between the lender and the borrower ensures a fair agreement regarding interest and the relevant payment term.

Payments can be made immediately when all have agreed because of smart contracts. Lawyers and other financial institutions never have to be consulted before the proceeds can be confirmed.

Social Media

Social media dApps can offer free speech without prejudice censorship. If any problems with posts arise, the community can simply vote on it and have it taken down.

Influencers on social media dApps have the potential to earn a whole lot more than they do on centralised platforms such as Twitter. This is because the host platform profits greatly from traffic to specific posts.

In social media dApps, systems can be put in place where users can tip with their tokens, and the receiver will earn the full amount without any third party getting a cut.


To explain the value that dApps can add to gaming, let's consider the game CryptoKitties. A cat is an asset as it represents tokens. The value of this asset then grows as the cat grows due to proper nurturing. The user can then decide on a fair price for the cat and sell it to any interested buyer.

In this game, cats can breed with other cats to create more valuable breeds. When players breed with these cats, they increase their assets on the platform.

This concept can be the backbone of so many games that allow players to simulate an income in token form from simply investing time into playing the game.

Voting And Governance

Voting is not a light subject because of the various complications it encases. From validation issues to illicit activity, voting is a tedious process for most.

Because of smart contract technology, dApps can make voting procedures accessible to all by submitting a list of proposals and setting a time frame for participants to use their tokens to stake their vote anonymously.

Votes can remain untampered within a decentralised network. Participants can also be rewarded for their input with a relevant token. This will encourage people to vote on proposals they think is fair more than they ever have before.