TLDR: DApp stands for a decentralized application. This type of software application is revolutionary because DApps both underpin and expand the use of blockchain technologies.
DApps are similar to applications running on your cell phone today with one subtle difference. DApps are decentralized in both execution and ownership. Conventional apps like YouTube, Zoom, or Messenger are owned by companies. DApps, on the other hand, are built on top of a decentralized network, utilizing decentralized smart contracts on the backend with traditional Web2 front ends.
Gamers like DApps because they can build in-game economies between players within games. Artists like DApps because they can increase their earning potential through smart contracts and trading. Technologists like DApps because they allow for new distributed, resilient, and of course, decentralized systems. Bitcoin is a DApp, and Ethereum, which was designed from the start to be a decentralized programmable blockchain, has become the most popular platform to build new DApps.
The appeal of DApps
DApps harness blockchain technology allowing for distributed ownership and control. Why is this important? Because common applications today are built with highly centralized control and governance, often making decisions not to the benefit of the user.
Take for example Facebook (Meta). They make their money by selling advertisement space on their social media sites. Meta has software that is able to harvest data from users clicks, groups, browser history and all on-site activity. They use this data to sell space and target advertisements. Businesses will pay extra money to Meta knowing their ad is being targeted to their exact audience.
The problem? Meta’s incentives are more aligned with advertisers, not with the users. Unfortunately the practice of surveying and analyzing data of users happens within the four walls of Meta, with almost no transparency, oversight, or control by the users. This is why many people do not trust tech companies.
Decentralized Applications are appealing because they offer a trustless experience meaning participants involved do not need to trust each other or a third party to function. Participants trust the blockchain. The logic and underlying rules of the protocol ensure sender authenticity (the actual sender is real) and the currency is valid (money/crypto is not fake). Furthermore the code can be viewed by anyone. Decentralized applications are open source and available for assessment. Once a DApp is running, it is autonomous. No one single entity can control the data or the processes. This is important to those with a growing concern that data is being bought and sold, and for those who don’t trust banks and governments with their money.
The power of DApps
No one can shut down or change the code of a decentralized application. It is immutable. To tamper the data would require a majority consensus on the networks. If this hijacking occurred it would alert the user. This single immutable property enhances DApps security. This is attractive because companies like Amazon, Alphabet, Uber are vulnerable to attack. Their central servers hold enormous amounts of our personal data. Malicious actors are inclined to go after these giants because if they breach it, they are rewarded in epic proportions.
DApps are not immune to exploits, as developers can still write bad code, but being open source, the exploits are free for all to see and call out, and we’ve seen this happen often with NFT drops. A community member will identify a vulnerability in the contract prior to release, forcing the developer team to fix and redeploy before the exploit is used.
Additionally, users can feel more assured with DApps privacy. To interact with DApp users do not need to provide a real world identity. Most DApps only require you to enter a wallet address. For example, instead of going through lengthy sign up in traditional application markets, users could sign up with their Ethereum domain names and a digital wallet.
As Web 3 continues to unleash new use cases, there is no doubt decentralized applications will continue to grow. DApps are being tailored for different ventures in an array of sectors including finance, gaming, collectables, and IRL events. In fact if you own a BFF Bracelet, flex up. You may have already been introduced to a variety of DApps along the way to your purchase. You would have needed a decentralized wallet program like MetaMask to buy it. Perhaps you used a decentralized market place like OpenSea to trade it. You might have even used a DApp to claim a BFF perk.
Who knew you were already proficient in DApps?
Bottom line
DApps are applications running on the blockchain. These types of applications host a full suite of features including added security, data privacy, and lack of a third party intermediary. These applications will continually be attractive to people who are interested in digital ownership and enterprise.
Amanda Hyslop (aka MizzuzB) is a writer in Web 3 exploring the intersections of culture X finance X technology. She is an avid NFT collector and advocate for women building on the blockchain.
This article and all the information in it does not constitute financial advice. If you don’t want to invest money or time in Web3, you don’t have to. As always: Do your own research.
