In the current scenario, there are about 4,000 dApps running in their respective categories, such as gaming, gambling, health & insurance. To filter out the leading ones in the Ethereum dApp activity would be gaming and exchange. Still, things are changing, and finance is gaining some attention gradually; it has witnessed significant growth over the past few years. But the dilemma still exists as dApps have been around since 2015, which accounts for almost seven years, so why haven’t they grown at a faster rate? Are they good enough for companies to rely on? 

What are Decentralized Apps (dApp)?

A decentralized application (dApp) is a distributed open-source software application that runs on a blockchain network rather than a single computer.

For example, BitTorrent, Tor, and Popcorn Time, where multiple participants are consuming content, feeding or seeding content, or performing both functions simultaneously.  DApps appear similar to other software applications that can be accessed via a website or mobile device, but they are P2P enabled. 

Since dApps are decentralized, once a developer releases a dApp’s codebase, others can build on top of it. The app is not under the control of a single authority. A dApp is used to create a variety of applications, such as:

1. Those for decentralized finance
2.  Web browsing
3.  Gaming
4.  Social media.

dApps are classified according to whether they operate on their blockchain or the blockchain of another dApp. They are classified into three types based on this classification.

1. Type I: dApps of Type I run on their blockchain. Type I DApps include blockchains such as Bitcoin and Ethereum.
2. Type II: Type II DApps are protocols that run on a Type I DApp’s blockchain.
3. Type III: Type III DApps are protocols that operate similarly to Type II DApps. Tokens are required to operate Type III DApps, just as they are for Type II DApps.
   

dApps are built on a decentralized network powered by the blockchain distributed ledger. The use of blockchain allows a dApp to process data and execute transactions across distributed networks. dApps are frequently built on the Ethereum platform.

Ethereum dApps use smart contracts for their logic. They are deployed on the Ethereum network and use the blockchain for data storage.

A typical web app, such as Uber or Twitter, runs on a computer system owned and operated by an organization, giving it complete control over the app and its operations. There may be multiple users on one side, but a single organization controls the backend. Although not all dApps work on standard web browsers. Some may work on websites with custom code to open specific applications.

Working on Decentralized Apps

Decentralized apps share the three common characteristics and key attributes listed below:

1. They are free and open source. A majority vote of users decides upon all necessary changes. This necessitates making the codebase available for evaluation to all users.
2. They allow for decentralized storage. Decentralized blocks are used to store data.
   
   
3. They provide cryptographic services. Decentralized data blocks are validated and proven to be true.

dApps are stored and executed on a blockchain system, most commonly Ethereum. The app is validated using cryptographic tokens, which are required to access the app.

These are similar to traditional apps in that they both use the same front-end code to generate a web page. The backend code of a dApp, on the other hand, is unique in that it runs on a decentralized P2P network. This is what frees dApps from a single authority’s control.

It is supported by a smart contract stored on a blockchain instead of a traditional application supported by centralized servers and databases. Ethereum is the most widely used blockchain for executing smart contracts.

Smart contracts enforce code-defined rules and act as middlemen in transactions. Because a smart contract only contains the backend and is often only a tiny part of the entire dApp, building a decentralized app on an intelligent contract system necessitates combining several intelligent contracts and relying on third-party systems for the front-end.

A smart contract runs on a blockchain, a ledger of data records stored in blocks rather than a central location. The data blocks are still dispersed across multiple locations. All data blocks are linked and governed by cryptographic validation.

There are always three main steps in Decentralized applications: themation, which includes the distribution of initial tokens, the publication of the dApp’s whitepaper, and the distribution of ownership. First, a whitepaper describes the dApp’s protocols, features, and implementation.

Then the miners and stakeholders who support the network’s validation and fundraising are then given access to the necessary software and scripts.

They are compensated with the system’s initial tokens in exchange. Finally, token ownership dwindles as more people join the network, either through the DApp or through contributions to its development, and the system becomes less centralized.

dApps distribute tokens through three main mechanisms: mining, fund-raising, and development. Tokens are distributed as rewards to miners who secure the network through transaction verification according to a predetermined algorithm in mining. 

Tokens can also be distributed via fundraising, in which tokens are distributed in exchange for funding in the DApp’s initial development phase, similar to an initial coin offering.

Finally, the development mechanism distributes tokens that have been set aside to develop the DApp on a set schedule.

What are various lists or examples of Decentralized apps?

Although there are thousands of dApps in use and development, three examples are Chainlink, TraceDonate, and Minds.

1. Chainlink is middleware software that provides Oracle networks with tamper-proof inputs, outputs, and computations. Google is putting it through its paces for a BigQuery PaaS data warehouse.
2. TraceDonate is a service that connects charities and donors to beneficiaries to build trust that donations are reaching those in need. The funds are stored in a digital wallet, allowing the donor to track how the donation is spent.
3. Minds is a decentralized app-based social media platform that uses open-source code to encrypt all personal data sent by its users.

Some more functional and working dApps examples for development are given below. 

1. Augur – prediction market platform.
2. Cryptokitties – It is an Ethereum-based game. It slowed Ethereum due to insufficient transaction processing and highlighted the scaling limitations of public blockchains.
3. Blockstack –  a decentralized application development platform.
4. Freelance – a platform on intelligent contact.
5. Steem – blogging and social media.
6. Uniswap –  a decentralized cryptocurrency exchange.

Decentralized Application Architecture :

• Blockchain:

The Ethereum blockchain is frequently referred to as a “world computer.” This is because it is a globally accessible, deterministic state machine maintained by a peer-to-peer network of nodes. The rules of consensus that the peers in the network follow govern state changes on this state machine.

In other words, it’s designed to be a state machine that anyone on the planet can access and write to. As a result, this machine is owned collectively by everyone in the network rather than any single entity.

Another thing to keep in mind is that data can only be written to the Ethereum blockchain; it can never be updated.

• Smart contracts:

A smart contract is a program that runs on the Ethereum blockchain and defines the logic behind the blockchain’s state changes. Smart contracts are written in high-level programming languages like Solidity or Vyper.

Because smart contract code is stored on the Ethereum blockchain, anyone on the network can inspect the application logic of all smart contracts.

•   Ethereum Virtual Machine (EVM):
  

It is a computation engine that executes the logic defined in smart contracts and processes state changes on this globally accessible state machine

The EVM does not understand high-level languages used to write smart contracts, such as Solidity and Vyper. Instead, the high-level language must be compiled into bytecode, which the EVM can then execute.

• Front – end:

Finally, there is the front end; it defines the UI logic, but it also communicates with the application logic defined in smart contracts.

Pros and Cons of Decentralized Applications

1. The benefits of dApps are given below :

• Fault Tolerance: A decentralized network can remain operational if a single node in the network is still operational, though performance may suffer significantly. Because there is no centralized network, a hacker would be unlikely to be able to attack a large enough network of nodes to bring a dApp down.
• Data Integrity: Since blockchain consensus algorithms ensure that data stored in the blockchain is resistant to change, data stored on a blockchain is immutable and secure.
• Flatform flexibility: The Ethereum blockchain is adaptable enough to allow for the rapid development of dApps for various industries.
• User privacy:  User privacy is respected. Users are not required to provide personal information to dApps to use any app-specific functionality.
• Censorship Resistance: Since dApps are not controlled by a single entity, it is extremely difficult for any individual or government to control or restrict access to the dApp.
• It operates on a peer-to-peer network of computers and does not rely on a single point of failure like a hosting server. This ensures that there will be no downtime or restrictions.
• Dapps are free and open source. This promotes the ecosystem’s faster and more secure development.

2. Decentralized applications also have the following weaknesses:

• Maintenance: dApps are difficult to maintain, debug, and update because all fixes necessitate the agreement of all peers in the blockchain-based network.
• Hard to scale: Scaling decentralized networks is more complicated than scaling centralized networks.
• Network congestion: If a dApp consumes too many resources, the entire network will be backed up.
• User encounter:  because dApps do not function similarly to centralized apps, developers may find it more challenging to create a user-friendly experience for end-users. Users must use a public and private key rather than a username and password to log in.
• Challenging to make needed code modifications.
• Difficulties in creating a user-friendly interface.
• It is experimental and may not be scalable.

Conclusion:

Blockchain technology has changed and continues to change the world. It has brought innovation to various industries and has enabled businesses to introduce new and exciting services and capabilities. 

dApps are just one byproduct that provides secure open-source software to everyday users and businesses. As with all advancements, many current practices will become obsolete, as evidenced by the growing number of finance-related dApps indicating increased blockchain adoption in the industry.

Apps have evolved into dApps as a result of blockchain technology. dApps are superior to traditional apps because they have the potential to become self-sustaining resources by allowing stakeholders to invest in dApp development. dApps will soon be preferred over currently available traditional applications for various purposes such as payments, storage, cloud computing, etc.

The adoption of blockchain technology is unavoidable, and many current practices will become obsolete. Banking services are already preparing to implement blockchain, which will allow them to operate with trust-free, self-sufficient, and decentralized networks.

As the number of dApps grows and more innovations enter the market, it is critical to understand the pros and cons of each application and technology as we adopt and adapt.

Frequently Asked Questions (FAQs)

• What are dApps designed for?

dApps functions on open sources; it is mainly designed for users or clients. A decentralized app runs on a blockchain or peer-to-peer computer network. It allows users to conduct transactions directly with one another rather than relying on a central authority.

• How does dApp work?

dApps backend code (smart contracts) runs on a decentralized network rather than a centralized server. The Ethereum blockchain is used for data storage, and smart contracts are used for app logic. A smart contract is similar to rules that live on-chain for all to see and follow exactly as written.

• How many dApps are functional presently?

There are currently over 4,000 DApps both in use and under development. Some of the most successful examples are ChainLinks, Trace Donate, Minds, Augur, Cryptokitties, etc.