Why We Should Care About DApps
As the popularity of blockchain technology is rising, DApps are becoming the foundation of the next internet revolution. The value of the blockchain industry has more than doubled within the last two years, namely from $210 to $548 million. This is no surprise because blockchain is not only used for cryptocurrency but also for decentralized apps, in short DApps. Analysts expect the value to grow exponentially in the next few years. It is therefore important for companies to stay aware of this new technology.
DApps – decentralized applications
An application is only considered a DApp if it meets the following criteria:
- Must be open source
- Code can be modified and redistributed
- The application must be decentralized
- Development is based on blockchain technology
- The app requires cryptocurrency as an incentive for its users
- Consensus mechanism must be integrated for security reasons.
DApps have many similarities with traditional web applications. This is because they are using the same front-end language. However, the main difference is that those applications are not using an API but Web3 that connects them to a central database. Currently, most are being developed on the Ethereum platform.
DApps are similar to P2P applications in which Information is exchanged among the many users. However, nodes in P2P applications are vulnerable and can be easily hacked. DApps on the other hand are powered by blockchain technology, which makes them more secure and reliable.
Bitcoin was the first DApp. However, it was Ethereum that demonstrated to the world the many advantages of using blockchain technology.
Advantages of decentralized applications
In decentralized applications, the data is stored in multiple blocks on the blockchain. Therefore, hackers cannot exploit a central point of failure as is usually the case with centralized databases.
Another benefit is that information cannot be sold, misused or changed by companies, again, as is the case with centralized apps. In a DApp, all data remains immutable. Data can only be changed by adding a new block. In this way, a high level of transparency can be achieved while at the same time-consuming administration can be abandoned and workflows improved.
Decentralized applications can also reward content creators. For example, on blockchain-based and decentralized social blogging platforms, content is self-regulated. Active users building community can strengthen their reputation and get rewarded accordingly. Based on these examples, it can be observed that DApps allow for a more authentic, productive and fairer system for all involved.
DApps development and applications
DApps are designed for the following purposes:
- Creating trustless environments
- Lowering barriers to access services
- Developing an open market with liquidity.
The first decentralized applications powered by smart contracts were gambling and high-risk applications in which users are becoming contributors. Through higher liquidity, more tokens can be distributed freely across platforms.
On the other hand, many Ethereum applications still face a major usability problem. This applies, specifically, to UI and UX. Users are not happy with:
- Delays in application actions
- User interfaces that are not smooth or efficient
- Transactions costs that are not transparent
- Scalability limitations
- The fact that many types of DApps cannot be realized.
DApps do succeed if they can allow a frictionless experience for the user. Fortunately, most popular applications today are user-friendly. Examples are presented in the next section.
DApps use cases
One of the possible blockchain applications in business is decentralized cloud storage. Instead of storing data on centralized servers such as Google Drive or Dropbox, companies can store sensitive data on decentralized applications. Files are encrypted and only accessible with a private key. This is associated with a higher level of security and privacy.
Through the increasing development of DApps, a new and promising market is evolving. A leader in this disruptive market evolution is Dapp.com, which helps users to discover, use and analyze a variety of decentralized applications.
With that in mind, the following scenarios are also possible:
If someone is talented in creating music, he could now use a DApp to produce his own music and get paid more than at Spotify. The music industry is very centralized. Artists only capture a small value of their work. This is also the case with other creative areas such as entertainment and writing.
What if it’s possible to crowdfund his own album or novel, retain ownership of his own intellectual property and sell royalty stakes to his fans?
Another example is renting apartments for vacations. Airbnb currently charges a 3% fee for the host while the company is taking 6 to 10 percent from the traveler. Such scenarios could belong to the past shortly. The company Beenest, for example, has developed a shared platform in which everyone can host people without paying transaction fees.
Fortunately, these examples are real. Those blockchain-based companies make use of direct transactions instead of relying on middlemen. While their founders are hoping to become wealthy, they do need to be patient. It will take some time until they can convince more users.
Are DApps living up to the promises?
The design of DApps is incredibly important but often neglected. As discussed before, the user experience (UX) and user interface (UI) of many DApps are still not satisfying. This is actually no surprise. The emphasis of blockchain and DApps is still on leveraging and scaling the core technology. On the other hand, this focus has resulted in DApps that people cannot use or don’t want to use.
Thus, it will take some time to develop DApps that are also user-friendly. However, it must be done. UX and UI need more attention. It makes no sense to launch a DApp that new users cannot operate. Today this is even more important as patience for new technology is very low. Only when these usability problems have been solved will fast and widespread adoption of DApps become possible. Airbnb has already become a very good example of what future DApps should look like. However, it should be kept in mind that a large number of designers were used to develop the Airbnb platform.
Certainly, there are many DApps out there that haven’t met the expectations of many users yet. On the other hand, DApps exhibit strong potential. According to experts in several online communities, it shouldn’t take more than a year for DApps to begin competing with the likes of Airbnb and Uber.
Society, at large, and particularly businesses should keep a very close eye on the evolution of DApps. While more companies are willing to deploy blockchain technology, the powerful potential of DApps is currently being both recognized and unlocked. Most importantly, DApps are decentralized and, thus, wholly independent of middlemen. This results in greater rewards for users.
However, many DApps are still facing design issues, which make them impractical for the mass market at present. On the other hand, a substantial number of use cases demonstrate that more DApps are becoming useful for society and for business. Despite stable growth and increasing adoption, it is expected to be some time before this new technology is fully unlocked and its potentiality realized.