What is a DAPP?
A DAPP (Decentralized Application) consists of back-end code that runs on a decentralized peer-to-peer network. A DAPP can also have a user interface, created by front end code that makes calls to the back end. DAPPs do not require a central authority to function: they allow for direct interaction between users and providers.
Characteristics of DAPPs
DAPPs often have the following characteristics:
- They run on the blockchain
- Their code is made open-source operates autonomously without any person or group controlling the majority of tokens
- They generate DAPP tokens to provide value to their contributing nodes
- Users are granted access to them in exchange for tokens
- Miners are rewarded with tokens when they successfully contribute to the ecosystem
Types of DAPPs
Ethereum delineates three primary categories of DAPPs:
1. Money management applications: users can transact with one another on a blockchain network, using its intrinsic currency. These DAPPs usually have their own blockchains, and we often refer to them as cryptocurrencies (such as Bitcoin).
2. Applications that integrate money with external, real-world events: for example, a logistics company may use an RFID chip location to determine that a shipment of cargo has reached a port, and only then release the payment for the shipment. This could even be accomplished with funds on the blockchain, with no human intervention, if both the buyer and the seller enter into a smart contract.
3. Decentralized Autonomous Organizations (DAOs): decentralized, leaderless organizations on the blockchain. These run from conception according to programmatically defined rules about what entities can be members, how members can vote, what businesses or activities they can engage in, and how tokens, funds, or value are exchanged. Once deployed, DAPPs operate autonomously according to their rules. Their members can be geographically dispersed anywhere.
To date, DAPP startups (built on top of blockchain platforms) have constituted the majority of ICOs. Most current Category 2 and Category 3 DAPPs use the Ethereum platform.
Why DAPPs?
DAPPs essentially allow all of the back end code and data to be decentralized, and hence immutable and tamperproof. Considering the decentralized nature of these applications coupled with the mechanisms that secure blockchain data, DAPPs have the potential to unlock a diverse array of use cases.
A few benefits of creating a DAPP rather than a normal application include:
• Payment processing: no need to integrate with a fiat payment provider to accept funds from users, as users can transact directly using cryptocurrencies
• User credentials: using a system of public and private keys, users can transact and bind their user sessions and metadata easily and with varying degrees of anonymity, negating the need for lengthy sign-up or registration processes
• Trust and auditability: open-source DAPP code is accessible and understandable to savvy users. This transparency and the inherent security of the inclosed data generates confidence in the applications. A public record on the blockchain also makes transaction information easy to audit by users or third-parties
Conclusion
The DAPP landscape is rapidly evolving. While Ethereum is currently the platform of choice for DAPP developers, Cardano, Lisk, QTUM and NEO are also popular for DAPP development. There are also numerous efforts underway to build other large-scale DAPP platforms.
DAPP development is in a nascent phase but the benefits that DAPPs provide (which traditional, centralized applications do not) suggest that we can expect to see impressive new functionalities and use-cases for blockchain technology in the near future.
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