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