Fintech

What Are Decentralized Apps? How Do dApps Work?

Decentralized Apps

Published on March 15th, 2022

We no longer need to download a program to use online services when we connect to the internet. For example, you can play every game on online casino Canada sites directly on your browser. While this technology is impressive, each of the programs we use is actually stored on a server.

So, what we’re doing is essentially running a code on the remote server using our browser. The next step in this technology is online applications known as dApps: they do not have any server. Below, we explain how this new technology works.

What Is A dApp?

dApp is short for “decentralised applications”. The term “decentralised” here means that the application is running on a blockchain. So, dApps do not have a physical server in the traditional sense: these applications run on a peer-to-peer network.

When you think of blockchain, you probably think of cryptocurrencies, but this technology is not just “digital money”.

Blockchains of modern cryptocurrencies also support features such as smart contracts and applications: they can store and run complex codebases.

dApps offer all the advantages of blockchain technology: there is no central authority with control over the network, all data is controlled by users. This means that dApps cannot be tampered with. Thus, they offer a much higher level of security.

If we give a simple example, it will be better understood what we mean. In traditional web applications, the code structure of the app is stored on a server.

Anyone with physical access to this server can make changes to that code structure. Let’s assume this is a financial application: even simple code changes can cause you to lose money, and such a security risk can take a long time to be discovered.

Enhanced Security

But if you develop the same financial application as a dApp, it will run on the blockchain, that is, in a digital database that is controlled by the users.

The code of this application cannot be manipulated by anyone. Since they are open-source applications, anyone can check and verify the codebase. It is also not possible to censor or restrict access to dApps because they do not have a physical server.

As long as you have an internet connection, you can access a dApp from anywhere in the world. Let’s continue to give examples:

  • Governments can seize physical servers and stop applications on that server from running. dApps cannot be confiscated – they do not have a physical server.
  • A hacker can steal user information stored by applications by attacking a physical server. dApps, on the other hand, are not affected by such security risks because there is no server that hackers can attack.

Other than the way they work, there is no particular difference between dApps and traditional web apps.

That is, a video game, a video player, an entire website, and any product/service online can also be offered in the form of dApps. The end-user will not notice any difference in terms of user experience and will continue to use these applications as usual. So, no technical knowledge or experience is required to use dApps.

The only difference is that they run on the blockchain and offer more security for the reasons we explained above.

They Never Go Offline

Decentralised applications never go “offline”. This is because it is impossible for them to experience a server problem. Web applications, no matter how big and common, need physical servers to run, and a failure on these servers can render the entire service unavailable.

One such mistake resulted in hours of unavailability for Facebook, Instagram, and WhatsApp in 2021. In dApps, however, such a problem does not occur because even if some users connected to the blockchain go offline, the service will continue through other users.

In addition, everyone using dApps becomes part of the blockchain and contributes to the network. Therefore, no separate fee is charged for transactions made with dApps.

They are fast, free of charge, and always available. And, as mentioned above, they are much more secure. In fact, decentralised apps have only two disadvantages:

  • Because they are open source, anyone can see their code structure and find security vulnerabilities. To avoid this risk, it is necessary to prefer actively developed and updated dApps.
  • If the blockchain has a small number of users, both the security and usability of dApps are compromised. Ideally, dApps running on blockchains with millions of users should be preferred. However, this causes the Ethereum blockchain to be preferred predominantly, as it has more than 4 million users. There are other blockchains in the market that can offer more than Ethereum, but their lack of preference hinders their growth.

In any case, dApps already offer much more than traditional web applications, and you can be sure that this will continue to be the case.

Decentralised applications have the potential to change the way the internet works in the near future. Think of websites without servers and millions of secure programs running on those sites: this will enable online applications to offer much more.