The Increasing Popularity of Blockchain-Powered Decentralized Applications (dApps)


Blockchain Technology's Progression Oracles for decentralized blockchains using decentralized software (dApps).

Decentralized Applications

Interest in and use cases for decentralized applications (dApps), which sometimes but not always use blockchain technology, have developed tremendously in recent years. In contrast to their centralised equivalents, dApps are supposed to be:

  • More resilient to network attacks, hacking, and server outages
  • More transparency between developers and end users

Theoretically, any application hosted on a peer-to-peer (P2P) network is decentralized, even if the vast majority of dApps run on well-known blockchains. For many years, the popular file-sharing protocol BitTorrent ran on a peer-to-peer network that lacked blockchain.

Blockchains provide significant resistance to censorship and transaction fraud, which regular P2P networks do not. It's important to realise, though, that it's not impossible for a rogue band of bad people to grab control of a blockchain and begin fraudulently altering the record. Having stated that, effective decentralization makes this effort substantially more difficult.

Network users who confirm transactions on the dApp's native blockchain are referred to as "nodes" in the area of decentralized applications. The Ethereum Network, for example, has around 4,000 nodes as of this writing. We can ensure that neither the distributed ledger's underlying blockchain nor the dApps that use it will encounter a single point of failure by dispersing these nodes over as many different areas as possible.

Such dApps in use today include decentralized exchanges (DEXs), blockchain-based financing services, gaming, and even token-based social media networks. Other applications include supply chain management programmes and online auction platforms. Businesses may incorporate the benefits of all of these use cases into their operations by cooperating with a Blockchain Development Company in Dubai.

Understanding Smart Contracts

Almost all blockchain-based dApps rely on smart contracts, although not all blockchains support them; for example, Bitcoin does not support smart contracts. Simply explained, a smart contract is a piece of computer code that acts as a self-executing contract between two or more parties that have willingly agreed to it. The conditions of a smart contract specify the various scenarios in which a certain agreement clause might be carried out, and many smart contracts are irrevocable once published on the blockchain.

Because computer code may be designed to be arbitrarily complicated, smart contracts can support use cases as simple as a friendly wager between two friends or as complex as an advanced custody arrangement between big financial institutions. Smart contracts have lately been used to control entire businesses by decentralized autonomous organisations (DAOs).

MakerDAO, a DAO on the Ethereum blockchain, is entirely controlled by a smart contract and allows users to construct collateralized debt positions by issuing various liability tokens. MakerDAO members are always confident in the transaction's integrity due to the open source nature of the smart contract code. These collateralized debt arrangements give bitcoin owners access to consistent liquidity.

Creating dApp Use Cases in 2023

. Financial Decentralization

Financial services are an obvious fit for decentralized applications, and several blockchains have begun hosting non-custodial exchanges that allow users to trade different tokens directly from their bitcoin wallets. ETH holders can use Uniswap, the most popular DEX on the Ethereum Network at the moment, to buy and sell ERC-20 tokens while keeping their current holdings safe in their MetaMask wallet.

BNB Chain (previously known as Binance Smart Chain) has gained traction as an alternative to Ethereum-based decentralized exchanges in recent months. SushiSwap and PancakeSwap, two well-known DEXs on the BSC, both charge lower transaction fees than the Ethereum Network. Nevertheless, DEXs are simply the beginning of where the financial use cases of dApps appear to be heading.

Mark Cuban and other well-known investors have invested in the Injective Protocol project, which aims to create decentralized derivatives and other financial instruments. Almost all DeFi apps also allow substantially faster settlement times than centralized clearing systems, and protocols like Injective have already begun to disintermediate many legacy financial institutions.

In the DeFi universe, a user's wallet operates as a Web 3 browser to connect with various financial ecosystems and smart contracts. The days of entering buy and sell orders on the centralised website of a trading exchange are long gone. The developing DeFi ecosystem provides modern protocols in place of traditional web pages and a distributed settlement solution in place of top-down clearance processes.

. Social networking sites

Since many social media users are experiencing the burden of censorship and the extensive control of centralised platforms, many blockchain projects have begun hosting decentralized versions of the most widely used social media programmes. Many of Silicon Valley's most prestigious venture capital firms are behind the ambitious DFINITY project, which recently debuted a decentralized prototype to compete with the LinkedIn network.

Thanks to financing from Samsung and Sony, Theta Network launched a blockchain-based video delivery network in early 2021. Larry Sanger, the well-known co-founder of Wikipedia, has chosen the EOS blockchain to hold a decentralized encyclopaedia of censorship-resistant user-generated content.

. Supply Chain Administration

Several of the world's largest corporations have taken notice of how the blockchain's tamper-proof nature makes it a natural fit for decentralized supply chain management solutions. Louis Vuitton, BMW, and Walmart are now using distributed ledger technology from Chinese blockchain company VeChain to prevent counterfeiting and enhance warehouse management.

Radio-frequency identification chips are used to track items as they move through the supply chain and to transmit their status to the VeChain blockchain. Georgia wineries have already begun using customised dApps to speed up supplies to suppliers, and Wyoming has begun working with blockchain-based initiatives to aid in cattle tracking.

. Voting and Identity

The academic records of five million students will be placed on the Cardano blockchain as a result of a landmark agreement made by the Ethiopian government with the blockchain software vendor IOHK in April 2021. Because of Cardano's decentralized identification programme, Atala Prism, these children will have a portable, verifiable, and secure digital identity that they may always take with them.

One of Ethiopia's future goals with the Cardano blockchain is voter registration during national elections, and the deal is expected to fully empower more than 100 million citizens with a decentralized identification system (DID). Tanzanian, Nigerian, and maybe South African governments have stated that they will follow suit soon.

Conventional lending banks can now offer a broader range of solutions to corporate clients and retail depositors alike, thanks to the built-in security features of dApps. Decentralization, on the other hand, provides hitherto unheard-of applications in sectors such as risk modelling and credit scoring.

Big financial institutions, for example, can use Credmark's decentralized, privacy-focused predictive analytics engine to make anonymous loans. Credmark uses blockchain technology to trace the history of bitcoin wallet transactions rather than factors such as employment history. As a result, banks may integrate on-chain data and apply sophisticated risk models to make decisions without acquiring sensitive consumer data.

The Unique Advantages of dApps

DDoS attacks and other traditional network attacks are ineffective against dApps due to the dispersed structure of the networks on which they are hosted. When compared to centralised hosting providers, the underlying blockchain's excellent fault tolerance can help ward off the majority of attacks from within the network's participants.

Because most dApps are open-source, it is easier for developers to debug and upgrade them. When a defect occurs in the code of an open-source, decentralized software project, groups of dApp developers can "swarm" it without requiring management approval. As a result, Blockchain dApp Development generally moves much faster than traditional software release cycles. Many dApps rely on open-source development tools such as GitHub to thrive, and using these tools also provides consumers with advance warning of impending upgrades.

In terms of user experience, censorship resistance is where decentralized applications (dApps) actually outperform centralised ones. Users of properly constructed social media dApps will never have to worry about their accounts being suspended or banned for violating arbitrary community rules.

Users of DeFi dApps can be confident that no centralised organisation will be able to "censor" their blockchain participation by confiscating assets. As a result, it should come as no surprise that dApps of all sizes have begun to thrive in countries with totalitarian governments.

The Drawbacks of dApps

The user experience of a dApp is only as good as the underlying blockchain's scalability, security, and decentralization. As users flock to the Ethereum blockchain, transaction prices have increased well above anyone's predictions. It is fairly uncommon for a transaction fee to be larger than the value being transferred on Uniswap.

The amount of security provided by smart contract programming languages varies widely as well. Solidity, the Ethereum ecosystem's principal smart contract language, has been the target of high-profile hacking attempts on a variety of decentralized apps (dApps). In some cases, hackers have returned the money they stole and have only used these network hacks to emphasise how important it is for Ethereum to prioritise security. Victims of hacking are not often that fortunate.

The Last Wise Words

Despite the fact that the ecosystem of blockchain-based decentralized applications (dApps) is still evolving, many users prefer these programmes over established ones in a variety of industries. Being ahead of the curve and providing users with a censorship-resistant platform safeguarded by blockchain technology can surely help improve brand loyalty and take market share away from competitors who are slow to adapt.