Decentralized applications, or “dApps,” are smart-contract-enabled programs that perform the same functions as traditional apps but without a single control centre. dApps operate instead through a peer-to-peer network or blockchain technology.
What is a dApp?
A report on “The General Theory of Decentralized Applications, Dapps” outlined the primary requirements for dApps. The paper states that a decentralized application must satisfy four essential requirements:
1. It must be able to function without a centralized network and have open-source code. To deploy modifications to the program code, users must agree.
2. Instead of using a centralized server, data storage must occur via public, dispersed networks.
3. The decentralized program is powered by a cryptographic coin, which users, stakers, yield farmers, and miners get as incentives.
4. The dApps depend on a consensus algorithm like Proof-of-Work or Proof-of-Stake.
Additionally, the research divides decentralized applications into three groups based on whether they have their blockchain:
Also Read; Cutting-Edge DeFi Cryptocurrencies and DApps
• Type I/Layer-1
These are applications with their blockchain. These DApps are the most well-known. Bitcoin is a good example. For instance, they need baked-in rules and a consensus method.
• Type II/Layer-2
These are dApps that use layer-1 blockchain technology. They use tokens for interactions and are often thought of as protocols. A layer-two DApp is one that is constructed on top of Ethereum as a scaling solution.
• Type III/Layer-3
These are dApps that are dependent on type II. Layer-three DApps are developed on top of layer two and often include the information needed for the latter two to communicate with one another. It could keep the scripts and application programming interfaces (APIs) required for layer one and layer two to function. A layer-three protocol, for instance, might host several layer-two DApps.
9 Essential dApp use cases Today
1. Finance
Users of traditional financial institutions, such as banks, rely on a single apex body to mediate their financial dealings. With decentralized finance (DeFi), however, customers don’t have to pay a third party to keep track of their digital assets. Users need to communicate with one another via a decentralized app integrated with smart contracts since all transactions take place on a decentralized blockchain network between peers.
2. Supply chain management
dApps can be used to create tamper-proof, transparent supply chain management systems that enable real-time tracking of goods and automate many of the manual processes involved in supply chain management. When commodities are transported through a supply chain, dApps may monitor their location and status at each step.
3. Identity Management
Organizations use dApps to construct decentralized identity management systems that enable individuals to control and share their data securely and privately.
4. Governance
dApps is beneficial to create decentralized governance systems that enable community members to vote on proposals and make decisions collectively.
5. Charity
dApps are valuable in developing decentralized charity platforms where people can donate crypto to their preferred charity and track their donation usage.
6. Real estate
Decentralized applications streamline purchasing and selling property directly between buyers and sellers and keep track of ownership and associated documents like deeds.
7. Healthcare
Healthcare data may be stored and managed using dApps. Doctors and other medical staff can better communicate and work together.
8. Education
Decentralized learning platforms can be built using dApps, removing the intermediary and facilitating direct communication and collaboration between educators and their students.
9. Social media
With the help of dApps, it is possible to build decentralized social media platforms where users can freely communicate and exchange information. Therefore, once individuals make anything like a public post, there is no way to change it or remove it. This makes it difficult to restrict access to decentralized social media applications.
Final Thoughts
Decentralized apps have various usages in our daily life. With the increase in blockchain adoption, dApps use will likely increase.
