As enterprises are quickly learning, blockchain is not only about currency. Ever since the Ethereum platform, created three years ago, developers have been testing it by building decentralized applications (Dapps) that are different from their centralized counterparts – centralized applications.

‘D’ for Decentralization

If you are wondering why Dapps have become such an interesting prospect for Dapp developers, you should know that much of the appeal lies precisely in the decentralization aspect.

The “d” in Dapps plays a crucial role in distinguishing between Dapps and apps. Dapps pull the focus and the practical execution of an application away from a centralized network, distributing it to a decentralized network. The decentralized network consists of users with no central authority over any aspect of Dapp performance.

Most of the standard web apps we use on a daily basis assume the existence of a central server and a central company (or several companies). The central authority manages, controls and makes critical decisions about the app’s functions. The majority of the app resources are centrally managed and distributed according to the will of a central power.

Dapp development turned the tables in favor of end users, who can now access the blockchain network from a decentralized server network and affect the decision-making process in a more democratic way.

How Trust Is Created in Dapps

Another essential difference between apps and Dapps is the process of creating trust in the network. Traditional apps build trust between users on the basis of past performance and business reputation. It is often supported by intermediaries that partially serve as a guarantee for the quality of the service while also implementing their own business model. Most card payment processors can be placed in the intermediary category.

The process of creating trust in Dapps is based on the technology itself. Blockchain technology enables developers to create immutable, permanent software solutions, applying across-the-network consensual decision-making processes. In this way, the trust is ingrained in the technology and doesn’t require reputational or legal proofs.

Dapps are open-source, which means that the code is available to be freely shared among the dApp developers. In contrast, most centralized apps are commercial projects that don’t allow code sharing.

Financial Models

In contrast to apps, Dapps use different financial models. Dapps don’t rely on external monetary value. Instead, they store value in the application itself, enabling the creators to issue currencies as tokens, generate value by work invested in the application, and enable trading of the tokens on financial markets.

In a way, Dapps use internal finance models established not simply as a means of exchange, but also as a motivator for investing work. This aspect doesn’t mean that Dapps only have a financial purpose. In fact, many Dapp development projects are concentrated on finding alternative solutions to building user chains, for instance, in supply chains, without numerous intermediaries and unnecessary fees, not having the token as a primary objective.  

App vs. Dapp Security

Dapps operate on a peer-to-peer network, taking away the security vulnerabilities of a central point. One central point can be more easily attacked by hackers, creating security issues with the whole app. Dapps, on the other hand, have distributed security and are less likely to suffer serious consequences from attacks.

As a new type of business organization, Dapps have the potential to transform the way we trade currency, purchase goods and services, and exchange value in general. Whether Dapps will dethrone traditional web apps is a question that needs to be further examined. However, Dapps’ capacity to self-sustain through incentivizing participation can change the way we do payment processing, as well as use computing power and data storage. The most exciting potential of Dapp development is in the creation of peer-to-peer marketplaces where users can complete transactions in a cheaper, safer, and faster way without the need for third parties that simply add more fees and longer, more cumbersome processes.

Related posts:

iExec uses blockchain to build a market for renting out cloud services and creating decentralized apps Quixxi offers software tools and a marketplace to boost enterprise blockchain app development Crowd Machine seeks to ‘democratize’ blockchain technology for non-developers who want to make decentralized applications The Difficult Truth about Blockchain