In blockchain technology, decentralised applications, or dApps, have gained popularity. Software programs known as "dApps" operate on a distributed network of computers and interact with one another via a consensus mechanism. A blockchain serves as the distributed network, and the consensus protocol is the mechanism by which network users agree on the network's current state.

In 2022, the dApp business continued to expand and change, and the quantity of Unique Active Wallets significantly rose. The estimated average number of daily unique active wallets (dUAW) was 1.58 million in 2021; however, in 2022, this figure rose to 2.37 million, an increase of 50%.

Let’s dive deep into dApps—what they are, how they work, and what the need is for decentralized applications over traditional applications.

History of dApps

The story of how dApps came to be is a fascinating one. It starts with the creation of Ethereum, a blockchain platform that was designed to be more than just a cryptocurrency. In 2014, Vitalik Buterin, a young programmer from Russia, published the Ethereum whitepaper, which outlined a vision for a decentralized platform that could be used to build a wide range of applications.

Buterin's vision was for a platform that could be used to create decentralized applications that ran on a distributed network of computers, rather than relying on a single central server. The conditions of the agreement between the buyer and seller would be directly placed into lines of code for these applications, which would be created using decentralized applications, which seem to be self-executing contracts. Rules and regulations can be created using smart contracts and then automatically enforced by the network.

With Ethereum, developers could build dApps that were decentralized, transparent, and secure. They could create applications that were resistant to censorship, and that did not rely on trust between participants. And, perhaps most importantly, they could create applications that were interoperable, meaning they could communicate with each other seamlessly.

Today, dApps are being built on a wide range of blockchain platforms, including Ethereum, EOS, and TRON. They are being used to create everything from digital identity systems to supply chain management platforms to peer-to-peer marketplaces. And as the technology continues to evolve, it's likely that we'll see even more exciting applications of dApps in the years to come.

What are dApps?

dApps are software applications that are built on top of a blockchain, which is a distributed ledger technology. dApps are decentralized, meaning they do not rely on a single entity or server to function. Instead, they are built on top of a distributed network of computers, and the participants in the network contribute to the maintenance and security of the network.

dApps can be built on various blockchain platforms, including Ethereum, EOS, and TRON. Ethereum is the most popular blockchain platform for dApps, and it is where the vast majority of dApps are currently being built.

How dApps work?

dApps, or decentralized applications, work in a different way than traditional centralized applications. While centralized applications rely on a single server or a group of servers to run the application and store data, dApps run on a distributed network of computers and store data on a blockchain.

The following are the key components and steps involved in the functioning of a typical dApp:

1. Blockchain network: A distributed application program (dApp) runs on a blockchain platform, a decentralized ledger that is kept up to date by a system of computers. The blockchain makes sure that all payments are transparently and impenetrably recorded.

2. Smart contracts: To carry out the program logic, dApp depends on smart contracts. On the blockchain, smart contracts are self-executing programs that are written in code. When specific circumstances are satisfied, they begin to operate automatically.

3. The computers that make up the network are known as nodes. They carry out smart contracts, verify transactions, and keep a copy of the blockchain.

4. A digital application's user interface enables users to interact with the program. This could be a command line, a mobile app, or a web interface.

5. Decentralized storage: Data is stored on a decentralized storage system, such as IPFS, that is also distributed across the network. This ensures that the data is accessible from anywhere, and can't be lost or deleted due to a single point of failure.

6. Cryptocurrency: Many dApps use cryptocurrency as a medium of exchange. The cryptocurrency is used to pay for transactions on the blockchain, and can also be used to incentivize nodes to perform certain tasks.

7. Consensus mechanism: The network uses a consensus mechanism to ensure that all nodes agree on the state of the blockchain. This prevents any single node from manipulating the blockchain.

To understand how dApp works in practice, let's consider an example of a decentralized social media platform. This platform might use a blockchain network, smart contracts, nodes, decentralized storage, and cryptocurrency to function. When a user creates a post on the platform, the post is stored on the decentralized storage system and a smart contract is executed to record the post on the blockchain. Other users can interact with the post by commenting, liking, or sharing it, and each of these interactions is also recorded on the blockchain. The platform might use cryptocurrency to incentivize users to create quality content or reward nodes that perform certain tasks, such as validating transactions.

How to build a dApp?

Building a dApp can be a challenging task, but the rewards can be significant. Here are the basic steps to build a dApp:

1. Decide on a blockchain platform.

   The decision of a blockchain platform is the initial step in creating a dApp. Ethereum is the most well-liked blockchain platform for decentralized apps (dApps), although there are also alternative possibilities including EOS, TRON, and NEO.

   
   

2. Decide on a programming language.

   You must select a programming language after selecting a blockchain platform. Solidity, which is used to create smart contracts on the Ethereum platform, is the most well-liked programming language for decentralized apps (dApps).

   
   

3. Design the Architecture

   The next step is to design the architecture of the dApp. You need to decide what features the dApp will have and how they will be implemented. This includes the user interface, data storage, and smart contracts

   
   

4. Write the Code

   Once you have designed the architecture, you need to write the code for the dApp. This involves writing the smart contracts in Solidity, as well as any front-end code for the user interface.

   
   

5. Test and Deploy the dApp

   The final step is to test and deploy the dApp. You need to test the dApp to make sure that it works as expected and fix any bugs. Once you are satisfied with the dApp, you can deploy it to the blockchain network.

Various Categories of dApps

Here are some of the main categories of dApps:

1. Finance and Payments: One of the most popular categories of dApps is finance and payments. These dApps provide a decentralized platform for managing cryptocurrencies and other digital assets. Examples include decentralized exchanges (DEXs), lending and borrowing platforms, and payment gateways.

2. Gaming: Another popular category of dApps is gaming. These dApps allow users to play games in a decentralized environment, using cryptocurrencies or other digital assets as a form of payment or reward. Examples include blockchain-based games, virtual worlds, and betting platforms.

3. Social Media and Content Sharing: Social media and content sharing dApps are designed to provide a decentralized platform for sharing and curating content. These dApps are designed to provide a more transparent and democratic alternative to traditional social media platforms, which are often controlled by a centralized authority. Examples include blogging platforms, video-sharing platforms, and social networks.

4. Supply Chain Management: Supply chain management dApps are designed to provide a more transparent and secure platform for managing the supply chain process. These dApps use blockchain technology to track goods and services from the point of origin to the end consumer. Examples include logistics platforms, tracking and tracing solutions, and digital identity verification systems.

5. Real Estate: Real estate dApps provide a decentralized platform for managing real estate transactions. These dApps are designed to provide a more transparent and secure alternative to traditional real estate systems. Examples include property listing platforms, crowdfunding platforms, and rental platforms.

6. Healthcare: Healthcare dApps are designed to provide a more secure and transparent platform for managing health data and transactions. These dApps can be used for a wide range of healthcare-related use cases, such as electronic medical records, prescription tracking, and telemedicine.

7. Identity and Authentication: Identity and authentication dApps are designed to provide a more secure and decentralized platform for managing identity and authentication. These dApps can be used for a wide range of use cases, such as online voting, secure access to online services, and secure messaging.

These are just a few examples of the many categories of dApps that are being developed. As blockchain technology continues to develop and mature, we are likely to see many new and innovative categories of dApps emerge.

Pros of dApps over Traditional Apps

Decentralized applications, or dApps, offer several advantages over traditional centralized applications. These are a few of the main advantages of dApps:

1. Decentralization: Since dApps are intended to be decentralized, they can run independently of centralized power or server. This increases their resistance to censorship and government control. In contrast, traditional applications are often subject to control and censorship by governments or corporations.

2. Transparency: Because dApps run on a blockchain network, every transaction is recorded on the blockchain and can be viewed by anyone. This makes dApps more transparent than traditional applications, which may rely on closed systems and proprietary code.

3. Security: dApps are more secure than traditional applications because they use a distributed network of computers and a tamper-proof blockchain ledger. This makes it more difficult for attackers to compromise the system, as they would need to attack multiple nodes simultaneously to succeed.

4. Lower Costs: dApps can be cheaper to run than traditional applications because they do not require a central server or other expensive infrastructure. They can also offer lower transaction fees because they do not rely on intermediaries like banks.

5. User Control: dApps provide individuals more access to their information and online personas. With the help of smart contracts and blockchain technology, consumers can frequently own and manage their data and digital assets.

6. Innovation: dApps is a relatively new technology, which means there is a lot of potential for innovation and new use cases. Developers can build new applications and services on top of existing blockchain networks, leading to new business models and revenue streams.

7. Interoperability: Because dApps are built on a blockchain network, they can be interoperable with other dApps and blockchains. This allows for the seamless transfer of assets and data between different networks, leading to greater efficiency and collaboration.

Cons of dApps over Traditional Apps

While dApps, or decentralized applications, offer many advantages over traditional centralized applications, they also have some drawbacks. The following are some of the main cons of dApps:

1. Complexity: Building a dApp requires a significant amount of technical expertise, as it involves working with blockchain technology, smart contracts, and decentralized storage systems. This makes creating or using dApps challenging for non-technical users.

2. Scalability: As a blockchain network's user base and transaction volume grow, the network may become slow and crowded. This could make it challenging to use dApps created on the network and raise transaction fees.

3. User experience: Many dApps have a less user-friendly interface compared to traditional apps, which can make it harder for users to navigate and use the application.

4. Limited functionality: The decentralized nature of dApps means that they have some limitations in terms of functionality. For example, they may not be able to access certain external resources or integrate with other systems as easily as centralized apps can.

5. Security: While the blockchain network itself is secure, the code used to build the smart contracts and dApps is not immune to bugs or vulnerabilities. If a vulnerability is found in the code, it can be exploited to hack the dApp.

6. Lack of Regulation: The lack of a central authority or governing body means that there is a lack of regulation in the dApp space. This can create uncertainty for users and investors, and can also make it more difficult for dApps to comply with legal and regulatory requirements.

Conclusion: The Future of Decentralized Applications

Some of the factors that are likely to drive the growth and adoption of dApps include transparency, security, decentralization, cryptocurrency, and new use cases. The future of dApps looks very promising. As blockchain technology continues to develop and mature, it is likely that we will see more and more innovative dApps being developed.