3 Steps To Understanding Decentralized Applications (Dapps) – Characteristics, Potential, and Development 2172

decentralized applications dapps


The last couple of years have brought along an increased popularity for decentralized applications, most of which are based on blockchain technology. At this time, the number of Dapps available on the market is still fairly low, when compared to traditional apps. However, it is believed that in the future, Dapps will mostly replace today’s internet apps, as they offer better security, are faster and can get more done.

So what exactly are decentralized applications? While there is no widely-accepted definition that we can rely on, Dapps are software applications that run on a peer-to-peer computer network, rather than on a single PC. This means that they are available on the web, yet a single entity cannot exercise complete control over the software – instead, administrator rights are given to all users if a set of commonly-accepted rules are followed.

1. Dapps and Blockchain Technology

Understanding what Dapps are and how they operate would be difficult without an understanding of blockchain technology. With this in mind, a blockchain is a ledger consisting of data records that are organized via blocks and linked with one another by using a variety of cryptographic protocols. Blockchain technology is special thanks to its decentralized status – which means that while the data can be viewed by anyone, blockchains cannot be controlled or edited by a single person or entity, without receiving prior approval from the rest of the network via consensus algorithms.

Ethereum network applications

Most Dapps are blockchain-based open-source apps, using the blockchain network for decentralization and data management purposes. It is important to point out that most developers have chosen to build their Dapps on-top of the Ethereum platform, as it provides great help with building apps, whereas its blockchain network helps deployment.

Common Features of Decentralized Apps

 To qualify as a Dapp, a software program needs to have several features, explained below:

  • Consensus Protocol for Transactions

 Proof-of-value for an app is essential for its success. Therefore, upon deployment, an algorithm needs to be chosen and implemented. Examples include Proof-of-Work used by Bitcoin Core or Proof-of-Stake used by Ethereum. Other examples include delegated proof-of-stake, proof-of-authority, proof-of-weight, byzantine fault tolerance, directed acyclic graphs and more.

  • Open-Source Software

 The source code of Dapps should be available for people to see, and edit as they see fit. Additionally, there are discussions related to how Dapps should be governed – usually, in the world of decentralized applications, users hold the power.

  • Decentralized Status

 As mentioned above, decentralization is extremely relevant to this market. A Dapp should record and store all relevant data, such as transactions and edits, onto the blockchain network.

  • Incentivising Users

 A large number of Dapps that are currently available on the market incentivize active community members or miners with tokens. These tokens can hold monetary value, or utility (granting access to the software for free, discounts etc.).

Apart from what has been outlined, there are numerous other benefits to decentralized apps. These include: greater security, provided by blockchain immutability; digital currency integration in the form of utility and value tokens; innovation potential, as open-source allows for a continuous improvement of the software.

2. Decentralized Application Development

dapps development

One common misconception on this market is that building a Dapp requires you to be a proficient programmer. The truth is that to create a decentralized app, all you need is an idea and enough ambition to kick-start the project. Developing a Dapp requires the creation of a white paper, explaining how the software will work, its purpose, vision, market potential, development architecture, consensus algorithm, team and other relevant details. Creating a whitepaper will help you determine whether there is interest in the market for your idea.

The next steps include hiring programmers to work on the app, and holding an Initial Coin Offering (ICO) to raise money for the development.

3. Future Potential

Speculating on the future of decentralized applications is a wonderful mind-game, granted that blockchain technology has the potential to reshape most of the world’s industries. Markets such as finance, healthcare, energy distribution, food delivery, supply chain, governance, real estate, VR, advertising, gambling, voting, logistics, identity, entertainment can all be improved with decentralization, and blockchain immutability.

Smart contracts are quickly becoming more relevant to the market and will be essential to the future of Dapps. For those who do not know, smart contracts are digital, self-executing contracts which securely exchange information once a set of criteria is fulfilled.

At this moment in time, most Dapps and blockchain integrations have been made in the private sector, via ICO start-ups. However, as the technology continues to advance, governments throughout the world will likely replace their slow, paper-based processes with blockchain-based alternatives.


To sum things up, the blockchain revolution is here to stay, and decentralized applications will play an important role in our future. As Dapps have potential across all industries, it is likely that in the next couple of years, everything will be blockchain based, and traditional web applications will slowly die out, as they become obsolete.

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Daniel Dob
Daniel is a digital currency expert, writer, consultant and investor. He has five years of experience with the crypto market, and is now in the process of kick-starting his entrepreneurial career. In his free time, Daniel enjoys traveling the world, and collecting thrilling experiences.

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