Although cryptocurrencies have been around for a while now, many people still do not understand how it all works. Some of those questions are about Dapps — what are they and how do they work? In this article, we will explore those questions and explain the DApps in simple language. So, let’s dive into it.
Imagine having your car transporting passengers while you are at work. Imagine having your laptop utilizing its spare capacity to serve businesses and people across the globe. Imagine being compensated for browsing the web and taking ownership of your attention. What if we told you that the world might not be so far away as you think?
A paradigm shift in the way we understand and use software models is approaching. When Bitcoin, as the first cryptocurrency, made all of us reassess our definition of Store of Value (SoV), it likewise revealed a small peek of the future — a world running on decentralized applications (Dapps). These distributed, flexible, transparent, and incentivized applications will prove their worth to the world by remapping the technological landscape.
The Birth of Decentralized Applications
The DApps concept is still in its infancy, so there might be more than one definition of what a Dapp is. However, there are notable common features of Dapps:
- Open Source. Ideally, DApp should be governed by autonomy, and all changes must be determined by the consensus, by the majority of its users. Its codebase should be available for scrutiny.
- Decentralized. All records of the DApp’s operation must be stored on a public and decentralized blockchain to avoid traps of centralization.
- Incentivized. Validators of the blockchain should be incentivized by compensating them accordingly with crypto tokens.
- Protocol. The community gathered around an app must agree on a cryptographic algorithm to use for showing proof of value. For example, Bitcoin uses Proof of Work (PoW).
If we follow the above definition, the first Dapp was, in a sense, Bitcoin itself. As an implemented blockchain solution that arose from difficulties revolving around centralization and censorship.
The Ethereum Network
Ethereum was the one that first platforms that showed everyone the true potential of blockchain technology. It enabled developers from all over the world to run their Dapps on top of Ethereum platform. Developers can code smart contracts on Ethereum, which serves as the blueprint for the DApp.
Ethereum is described as an alternative protocol for building decentralized applications with a focus on reduction of the development time, security, and scaling. Outfitted with its very own language, Solidity, Ethereum empowers developers to form smart contacts using the Turing-complete Ethereum Virtual Machine (EVM). With these tools freely accessible, developers delivered Dapps that have real-life use cases, ranging from asset management to resource planning.
Examples of successful Ethereum-based Dapps that have reached millions of dollars in market cap include Golem, Augur, BAT, etc.