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What Is A DApp? A Beginner’s Guide To Decentralized Applications
While the crypto community might be welcoming to newcomers, it sure seems difficult to keep track of all the jargon. If you’ve heard the term ‘dApps’ or ‘dApp’ thrown about, you might be wondering what on earth it means.
We’ve got your back.
What is a dApp?
DApp simply stands for ‘decentralized application’.
Everybody is familiar with regular (read: centralized) applications. Whether it be Instagram, Uber, or Skyscanner, apps are an increasingly important part of modern life. Even banks and other financial institutions are predominantly accessed via their apps.
They all work, more or less, in the same way. You download the app, create an account (another one), and then you make use of whatever it offers. Maybe you book a hotel. Maybe you check your bank balance. Maybe you send an email. Every action you take on these apps takes place via centralized servers.
But there’s a digital revolution happening right before our eyes. Prepare for the app-laden world of today to be relegated to the pages of history, replaced by a more secure, more private, and fairer suite of dApps.
DApps, or decentralized applications, use a different base layer for their technology. They are still digital applications, but dApps operate on a blockchain network or peer-to-peer network instead. This means that no company, business or central authority will oversee the dApp — it’s free from centralized control and lacks a single point of failure. Essentially, the more users on a dApp, the more secure it becomes.
If you want a deeper dive into how peer-to-peer networks work and why they’re important, then check out our article on P2P networks.
Why are dApps better than our current apps?
Today’s wonderful world of apps might seem like an amazing feat. Millions of dollars have gone into creating, updating, and maintaining them, but there are fundamental flaws with our current applications that are all-too-often overlooked.
Firstly, the vast majority of apps are run by a company that cares more about profit than they do about their users. In a business, it’s understandable that there are certain priorities; but wouldn’t it be better for the end-user to have an application that puts the user first?
We think it would. After all, what are dApps for if not to return digital autonomy to the user?
There are a few main reasons why dApps with smart contracts are better than regular applications.
Free-to-use apps are only free because they collect and sell user data. In a decentralized web 3.0, users will own their own data and realize the true value of their data too. Currently, apps collect more personal data than most people are comfortable with. It’s then sold on to advertisers unbeknownst to us — we don’t see a single cent.
The data storage of these apps is cause for concern too. If the centralized entity is subject to a hack, all of our personal data is at stake simultaneously.
Decentralized data storage is being worked on side by side with decentralized applications to ensure that this is not a problem that dApps will face. Elastos even incorporates decentralized data storage into its suite of technologies for developers to seamlessly integrate it with their dApps.
With a centralized entity governing the app, they can restrict users that they disagree with politically or otherwise. They can censor posts on social media, and block your account or restrict your access if you break their rules.
On top of this, governments can ban certain apps, or operating systems can refuse to add them to their platforms (like the Apple App Store). While this can still affect the distribution of decentralized applications, it can’t stop them entirely. There are no centralized servers to shut down.
With smart contracts, dApps such as those on the Ethereum network cannot discriminate. They are free for all to use, regardless of race, nationality, location or personal beliefs. It’s written in the backend code.
Where do dApps come in?
Decentralized applications (dApps) usually operate on a smart contract platform such as, in the case of the Ethereum network, the Ethereum virtual machine. However, a dApp can technically exist without smart contracts, and even when it does employ them, it’s not an indicator of how decentralized it is. It just means that the decentralized app becomes automated, and therefore free from the need of authority.
Namely, they are free from censorship, control of a single central authority, and data misuse. Because they rely on a decentralized network, they act similarly to BitTorrent in that they grow stronger as they accrue more active users.
Consider a social media platform where users can publish posts that can never be removed or taken down by a governing body. Imagine too, that users own their own data and can retain the same log-in across all decentralized apps. This is called a decentralized identity (DID), and you can read all about their part in the digital revolution here.
DIDs, data ownership, and decentralization are prominent features of the Elastos blockchain. You can check out the future of social media by creating your own DID and trying Profile, a social media app that merges aspects of Facebook with LinkedIn in a completely decentralized manner.
The benefits of dApps
Because dApps function on smart contracts, they are able to provide benefits that regular apps simply can’t provide. While dApps struggle to compete with the user interfaces of mainstream apps, that’s because the technology is still in its infancy whereas normal apps have been around for several years. With time, they will be as smooth and seamless as the apps you use daily.
Here are just some of the benefits of using decentralized applications (dApps).
If you haven’t read our article on the advantages of decentralization then make sure you check it out. In short, decentralization makes apps immune to censorship. If a central authority decides to ban Twitter, they can literally force the headquarters to close down. With a decentralized app, that’s impossible. There is no headquarters. They can try to enforce a ban on people using a dApp, but they can never stop it from existing.
This is because dApps run on a decentralized network which could be hosted by millions of nodes. Every single one of those nodes holds a backup of the dApp. If one fails, the rest continue. If one thousand fail, the rest still continue. Not only does this prevent censorship, it minimizes security risks too.
A blockchain network is supported by a consensus mechanism rather than a single entity. The need for a majority consensus drastically reduces the likelihood of a dApp heading in a malicious direction. This, however, can also cause problems when trying to fix a minor bug, for instance.
It’s no surprise that DeFi dApps were the first to explode in popularity. Financial institutions can’t compete with the perks of decentralized finance. Not only are the interest rates far higher in DeFi, but you own your own money. That was what the rise of Bitcoin was all about — being in charge of your finances. Now, we can utilize the same underlying technologies to provide ownership of data and much, much more. Just look at all the potential NFT use cases to understand how early we actually are.
Because dApps are accessible 24/7 in all countries, it makes them ideal for essential applications in health and finance. You can even find a dApp for a decentralized credit service; take CreDA for example, it aims to be the first application to use smart contracts to facilitate loans using off-chain data. This means you will be able to use your real-life credit score to take out a loan in a completely decentralized way. Read more about this innovative idea on CreDA’s website.
Blockchains often reward users who launch a node (and consequently, a backup of a dApp or dApps). In a proof-of-stake blockchain, this is achieved through staking rewards. You earn a cryptographic token for supporting the network and voting on nodes.
This is different from proof-of-work (like Bitcoin), which rewards users for completing complex algorithms with their computing power, securing the network through mining instead.
Other blockchains and dApps are based around community governance, letting the users decide the destiny of the platform. By holding the dApp’s governance token, they are able to vote in a DAO.
Elastos isn’t content with just one consensus mechanism. For maximum security and decentralization, it has proof-of-work, proof-of-stake, and a decentralized autonomous organization (DAO).
Because they rely on open-source smart contracts, dApps don’t need to be trusted in the same way a person or business would need to be. They cannot falter so long as the code is sound. These smart contracts automatically carry out the agreements you and the other users make.
Decentralized exchanges like Uniswap and Glide Finance reveal this most obviously. When you buy or sell a cryptocurrency, you don’t need to trust anybody to give you what you paid for. The smart contract takes care of it for you.
Having said that, it’s important that the dApp itself is safe. If the code is faulty, the smart contracts could be compromised.
Open source code
The vast majority of apps today are not open source. DApps, generally speaking, are. Developers, or anyone else with the know-how, can read the code for themselves to ensure that it’s safe. It makes it truly transparent in that you can ensure there is no fishy business going on regarding your data or money.
If users dislike what they see in the code, they are able to ‘fork’ it and create an alternative with new features or fixes. Both Bitcoin and Ethereum have been forked several times. A lot of DeFi platforms are also forked to work on the Ethereum virtual machine of other blockchains. For example, FilDA is a fork of Compound, one of the big Ethereum applications in the DeFi space.
This can also be a double-edged sword as open source code enables potential hackers to scour the smart contracts in search of possible exploits.
The downside of dApps
DApp development is still in early stages. The user interface isn’t quite up to par with modern apps, but it will get there with time. That said, for people to make the switch from apps to dApps, they will need to rival the user-friendly interface of the apps we’re all used to.
Some people raise issues with how well dApps will scale. On Elastos, it’s possible to have infinite sidechains, meaning there will never be a problem with scaling. A new chain can be created before network congestion ever becomes an issue.
DApps have also been criticized for the difficulty in making changes to the smart contract once it’s been deployed. As they are built to be immune to interference, it makes bug fixes and updates more difficult to employ than with regular applications.
How to use dApps
For the user, dApps essentially work the same as normal apps. The difference lies in the need for a transaction to interact with a smart contract. If publishing something, making a trade, or anything else that requires the smart contract to act on your behalf, you will need to pay gas. This is how blockchains work. Always keep enough crypto in your wallet to pay gas fees.
On blockchains like Elastos, gas fees are a fraction of a cent. On Ethereum, however, gas fees for a simple transaction can often be hundreds of dollars. Ethereum 2.0 is supposedly going to reduce this cost, but it’s a very slow process – one that’s one step closer after Ethereum’s successful Merge upgrade in September 2022.. Meanwhile, a range of hyper-fast, super-cheap blockchains are competing to take market share from Ethereum. Solana, Cardano, and Binance Smart Chain are the main competitors right now, but Elastos has a growing dApp ecosystem and is a challenger in its own right.
Another difference between apps and dApps is that you don’t need to download dApps, meaning you can access them directly from a dApps browser. In the future, this could be done directly from inside the metaverse. For now, the Elastos Super-Wallet, Elastos Essentials, has a built-in dApps browser that enables users direct access to the best dApps on Elastos: Glide Finance, Elacity, Feeds, Profile and more.
Because Elastos connects to over 10 different chains, you can also access dApps from Binance Smart Chain, Ethereum, Arbitrum, Avalanche, Fantom, Heco, Polygon, Telos and more directly from your wallet. Essentials is one of the best crypto wallets on the market.
Why Elastos dApps are better
Despite being called decentralized applications, not all dApps are as decentralized as they could be. What makes dApps on Elastos unique is that they can implement the pillars of Elastos tech: DIDs, Carrier peer-to-peer network, and Hive decentralized storage.
With these fundamentals, dApps built on Elastos are some of the most decentralized in the entire crypto space. Not just apps that utilize a smart contract like the majority of so-called dApps out there, an Elastos dApp enables you to log in with a secure digital identity on a peer-to-peer network that eliminates central authorities. You can store, send and save your data without the need to reroute it through middle-men, meaning you own your data at all times.
It’s not just a dApp — it’s an Elastos dApp.
Start your journey with decentralized apps on Elastos
Download Elastos Essentials (here for iphone users and here for android) and check out the one-stop shop for decentralized application lovers. Play with the different chains and switch from PancakeSwap to UniSwap to Glide Finance seamlessly.
You can also use your Elastos Essentials wallet to read and vote on the Elastos DAO proposals, stake your ELA, and create your very own DID.
Welcome to the wonderful world of Elastos: we’re just getting started.