Since the release of Bitcoin in 2009, cryptocurrency has taken the world by storm and given birth to thousands of alternative coins, such as Ethereum. Dapps first appeared on the Ethereum blockchain in 2016. Now they are also available on a variety of other blockchains. In this article we will explain what they are, how they work, and their advantages and disadvantages.
So What Are They?
Dapps, or decentralized applications, operate on a peer-to-peer blockchain network, eliminating the need to use big tech companies as intermediaries. They are used for NFTs, gaming, finance, social media and many other purposes.
Let’s take Twitter, for example. A developer can create a Twitter-like dapp and publish it on the blockchain. Then users can sign up and use the dapp just like they would use any other website or application. The key difference is that a corporation does not own and control your data.
In fact, this has already happened. Mastodon is a very popular decentralized alternative to Twitter. Millions of people use Mastodon to connect with friends and share messages, photos, and videos. The best part is that it’s owned by the community and there are no ads!
Mastodon’s official website is: https://joinmastodon.org/
How Do Dapps Work?
Now that we know what dapps are, let’s discuss how they work.
The code for dapps runs on a decentralized network instead of a centralized server. The blockchain is used to store data, and the application logic is stored in smart contracts.
Smart contracts are simply a collection of rules that live on the blockchain. They also have the ability to store cryptocurrency. This enables code to become the middleman for transactions.
Once a dapp is sent to the blockchain, it is immutable, meaning it cannot be changed. They must follow the code written in the smart contract.
What Are the Advantages of Dapps?
- Uses peer-to-peer networks instead of allowing companies to collect and sell your data.
- Offers great resistance to censorship.
- Removes single points of failure, making Dapps more robust and experience less downtime.
- The open source architecture encourages continued development and innovation.
- The use of smart contracts means it’s easy to integrate cryptocurrency payments.
What are the disadvantages of Dapps?
- Many Dapps have small user bases, which limits their ability to efficiently harness the power of blockchain networks.
- Software updates can be more challenging and time-consuming because of the distributed nature of blockchain applications.
- Ethereum-based Dapps sometimes have high transaction fees. This is because transaction fees can increase or decrease depending on how busy the network is.
Examples of Popular DApps and Where to Find Them
There are literally thousands of dapps running on many different blockchains. Here are just a few popular ones you should check out:
Uniswap is one of the leading decentralized exchanges. It is open source and its processes are automated. It operates on the Ethereum blockchain. It’s not owned or run by a company but is controlled by token owners, who vote on any changes to the protocol.
Axie Infinity is a well-known blockchain game with a pay-to-earn model. Axies are adorable but fearsome creatures who fight to protect their homeland, Lunacia. The game is full of activities for players to take part in, such as collecting, raising, and breeding axies. They can also take part in battles to earn rewards. And buy, sell, and rent land to build their own kingdoms.
Steemit is a blogging and social media platform based on blockchain technology. Users are rewarded with the platform’s native cryptocurrency, STEEM, for creating content, voting, and commenting.
Opensea is a NFT marketplace where you can explore, buy, and sell digital collectables such as photos, art, music, and other NFT projects. Opensea is currently one of the largest and most popular NFT marketplaces in the world.
A great place to discover new decentralized applications is the State of the Dapps: https://www.stateofthedapps.com/
Dapps are still new to the scene but have already made a big impact in the crypto space. They hold great promise for the future and are beginning to transform industries such as art, gaming, and music. If you haven’t experienced them yet, now is the time to dive in and explore all they have to offer.