Traditionally, centralization was the concept that has been applied to almost all applications but in the last few years that has taken a turn when the concept of decentralization was introduced which led to the development of decentralized applications more popularly known as dApps.
Presently, many industries including entertainment and financial services have started to adopt decentralized applications instead of centralized applications.
Have you ever wondered why decentralized applications are now becoming the most adopted form of control and power? To understand this, you will need a comprehensive understanding of what dApps are.
This article is a complete guide on decentralized applications that will dive into the concept of dApps, how they work, their advantages and disadvantages, their uses, and so much more.
What Is A Decentralized Application (dApp)?
Before we discuss what a decentralized application is, let us give you an overview of the concept of decentralization.
Decentralized means the distribution of control, decision-making, and power to a large networking system instead of being handled by one entity. This is the prime factor that makes it different from the concept of centralization.
In centralization or centralized apps such as Twitter, even though multiple networks are active participants of the community, the power and control belong to the centralized server.
In decentralization, the power and control are distributed among multiple participants which eliminates a single or centralized server from the picture.
Now let’s see what a decentralized application or dApp is. This is an application that operates on peer-to-peer or blockchain technology which distributes control of the application to multiple participants rather than belonging to a single centralized one.
In decentralized applications, the participants of the application have the freedom to consume or feed content onto the application.
To give you a deep understanding, let’s take the example of X formerly known as Twitter. On X, a user is allowed to post anything that they want but the single authority aka the centralized server of the application can delete it anytime they want.
But if we made an X dApp, if a user shares a message or posts something on the application, he/she is the only one who can delete it because the power and control were distributed to them instead of a single authority.
Advantages Of dApps
dApps have a huge number of advantages which are one of the prime reasons that more and more dApps are being introduced. In this section, we will be discussing a few of the main advantages of dApps.
Transparency
Transparency is one of the prime advantages of dApps that makes it different from centralized applications. dApps has a transparent mode of transactions and activity which allows members of the app to verify any information and activities on their own without relying on a single authority.
Autonomy
Autonomy is another advantage of dApps. Since these applications function in a decentralized manner users of the application have the option to take ownership of data and interact with others without relying upon a centralized entity. This makes dApps a convenient one to use.
Accessibility
dApps is an open-source application that is accessible to all people around the world. With a good internet connection, people from anywhere can use this application and become a part of this network.
The decentralized mode of these applications gives access to all industries including finance, digital assets, and entertainment.
Privacy
dApps functions on blockchain technology and this ensures more privacy than centralized apps. For a person to use dApp, they don’t have to share any personal or real information which isn’t the case with centralized applications.
Since the data that you share with dApps are distributed among multiple networks, it is impossible to alter it.
Collaboration
Collaboration is an advantage of dApps that is unique to this one. Often, dApps allow collaboration from multiple networks and allow you to integrate innovative tools into the existing platform. This also helps in building a strong community.
Cost Efficiency
dApps does not have any intermediary or single entity that has the control, therefore the cost is low when compared to centralized applications and it has more efficiency.
This advantage of dApps can benefit many industries in cutting out extra costs, especially the financial sector.
Disadvantages Of dApps
Although dApps has a wide range of advantages, it has its share of disadvantages or shortcomings. The advantages of dApps seem to outweigh its advantages.
The main disadvantages of dApps are discussed below:
Scalability
The main drawback of a decentralized app is its limitations on scalability. Majority of the blockchains have limitations in terms of efficiency which can slow down the transactions and restrict an application’s capacity to scale.
User Experience
As of now, dApps aren’t as efficient as centralized applications in offering the best user experience.
Since it isn’t managed by a single entity, people who are new to blockchain networks and the functioning of dApps might find it difficult to use them and many might need prior knowledge of decentralization to use the application efficiently.
Vulnerability to Scams
Compared to centralized applications, dApps are more vulnerable to scams. This is because coding errors and similar mistakes can make the application more vulnerable to malicious activities and fraud.
Current dApps Use Cases
Day by day many applications are being developed on decentralized platforms. Some of the most common categories or industries that are adopting dApps instead of centralized applications are the following.
Finance
Finance is one of the main industries that has been developing many dApps ever since the concept of decentralization was introduced.
This is because, in a centralized application, you will have to rely on a single entity for your financial transactions, and in most cases, it is the bank.
However, in decentralized applications, there is no need for a person to rely on a single entity to manage and control their assets. Decentralized apps serve as an alternative to traditional financial applications.
Gaming
The gaming industry is becoming larger day by day and blockchain technology has been integrated into the sector to transform its functionality.
dApps in the gaming world allow users to securely own and trade their gaming assets without relying upon a centralized authority.
One of the best things about dApps in the gaming sector is that dApps allow users to sell their gaming assets on a secondary marketplace or use them as leverages if needed.
Social Media
The majority of social media platforms have a centralized mode of functioning but many social media dApps were introduced in the past few years that provide solutions to the main problems that Web2 social media platforms have such as privacy, revenue compensation, and control across content.
On dApps users can monetize their data, receive profits from followers without having to share it with the platform, and have full control over their content.
Governance and voting
Companies have now started using a special kind of dApp called Decentralized Autonomous Organization (DAO) to govern their organization.
DAO allows organizations to automate their voting mechanism and allows the members to be part of the organization’s future.
These apps also serve as a transparent platform to implement any changes and allocate resources within the organization.
The Bottom Line
In the coming years, dApps are expected to introduce more advancements in almost all sectors. The blockchain technology based on which it functions distributes power and control to multiple networks which makes dApps more transparent and censorship resistant.
With dApps, a user can directly interact with the application without any middle person. Multiple advantages to dApps make it a unique application when compared to centralized ones.
However, there are a few drawbacks of dApps that need to be rectified for it to be fully fledged, scalability being the most important one.
If dApps can overcome its shortcomings, we can expect more and more sectors to adopt decentralization and develop their applications on the dApps website instead of the traditional ones.
