The way software models are viewed is changing all of the time. When the first cryptocurrency, Bitcoin, was launched, we were forced to reassess our thinking around SoV (Store of Value). We were also able to see a glimpse of what the future might be like: a globe that runs on decentralized applications, or Dapps. These applications are resilient, distributed, transparent, and incentivized. They will be able to prove themselves by how they remap the landscape of technology.
What is Blockchain?
Before understanding Dapps, it is important to be familiar with the technology behind them, that being the blockchain. In simple terms, a blockchain is a series of records in a sort of ‘ledger’ that is organized in ‘blocks’. These ‘blocks’ are interlinked through cryptographic validation. The blockchain is not stored anywhere centrally nor is it managed by any particular entity. This means that added transactions are irreversible and any transaction that occurs is visible to everyone. Any open-source software that leverages on the technology of the blockchain is a Dapp.
The rise of Dapps
This is a concept that is still new, which means there are many definitions of what a Dapp actually is. However, almost all definitions have things in common.
- Open source. Dapps are always open-source. They should be governed autonomously and any change is decided by a consensus or the Dapp’s users. The code base of the Dapp has to be available to be scrutinized.
- Decentralized. In order to avoid common pitfalls that occur with centralization, the operation records of the application have to be located on a decentralized and public blockchain.
- Incentivized. The blockchain validators should be given incentives and should be rewarded accordingly in the form of cryptographic tokens.
- Protocol. There needs to be an agreed cryptographic algorithm that demonstrates proof of value. Ethereum currently uses Proof of Work (PoW) but has plans to use a hybrid version of Proof of Stake (PoS) and PoW in the near future.
If we stick to the definition above, we can actually say that Bitcoin itself was the first Dapp. Bitcoin rose as a blockchain solution owing to issues of censorship and centralization. It can be said that Bitcoin’s transactions occur without centralized authorities and intermediaries as a public ledger that is self-sustaining.
Ethereum Dapp Examples
Ethereum was the first to show the potential of blockchain. Developers from across the globe began running their Dapps on top of the platform. Ethereum is essentially a blueprint for a dapp. Ethereum is, in essence, the mothership of Dapps. Its language, Solidity, means that develops can make smart contacts through the use of the Ethereum Virtual Machine (EVM). In real-life use, Dapps have been created for resource planning and asset management, amongst other things. To name an example, Ethlance is a dapp for freelancers. On this dapp, people can either hire or work for Ether cryptocurrency. It is the first job market platform that works entirely on Ethereum blockchain without any service fees at all. The reason Ethlance and other apps are able to run without fees is because they’re not renting servers. The only thing that is payable is a tiny amount (just a few cents) in ‘gas fees’. This is not at all for profit but it is simply to cover the costs of the electricity of the computers running the Ethereum blockchain.
In Summary, a Dapp is a decentralized application that runs on the EVM. A person can simply upload a dapp on the blockchain and works from there. Because it’s decentralized, it has unique properties in comparison to traditional applications. For example, with a Dapp, there isn’t a fraud risk. Also, privacy is guaranteed and there is no downtime or risk of interference. The Dapps might not feel any different from apps from the App Store but they are powered by the blockchain.