Recently, cryptocurrencies and blockchain have been the talk of the globe. Not a surprise was given that by 2027, the global blockchain market is anticipated to grow to $69.04 billion. It is obvious that decentralized ledger technologies are becoming more popular.
You’ve probably seen a lot of news in the media using phrases like NFTs, Bitcoin, and crypto-wallets. Decentralized applications (DApps) are something you probably hear about less frequently.
DApps will be the topic of our discussion today. Even though they haven’t received much media attention yet, it’s crucial to understand what they are, their benefits and drawbacks, and whether your company needs them.
Professionals who want to assist their organizations in leveraging cutting-edge technologies must keep up with the most recent innovations. So let’s get going and explore the realm of decentralized applications.
A DApp is what?
Given that the idea is still in its infancy, it is difficult to give a concise explanation of what DApps are. But we’ll try to make things clear to you in a straightforward way.
DApps are, in essence, regular software programs with the addition that they are created on decentralized networks like Ethereum. Therefore, you must first comprehend blockchain, the technology that underpins DApps, in order to completely appreciate the notion of DApps.
Blockchain is a decentralized digital ledger that facilitates the tracking of assets and the recording of transactions. Numerous blockchain application cases that are revolutionizing several industries are already available. The insurance, healthcare, and financial industries have already begun to change as a result of this technology, but this is probably just the beginning.
The most well-known cryptocurrency is Bitcoin. Possibly the very first thing that comes to mind when discussing blockchain technologies. Ethereum is a term you’ll hear the most frequently, though, when we’re talking about DApps. That’s because this blockchain platform is where the majority of decentralized applications are created.
In conclusion, unlike conventional apps, DApps link to the blockchain using smart contracts rather than centralized data servers. A smart contract serves as the foundation of a DApp since it automates the execution of agreements between participants.
Platforms for developing DApps
As we’ve already mentioned, the Ethereum platform serves as the foundation for the bulk of DApps. With over 3,500 DApps already developed and close to 160k daily active users, it’s possible that these applications may soon become standard.
The top 5 development platforms as of May 2021, according to State of the DApps, are Ethereum, EOS, Steem, TRON, and Klaytn.
As you can see now, when it comes to the total number of DApps and daily active users, Ethereum significantly outpaces all other platforms. The fact that Ethereum’s decentralized apps receive the greatest attention is, therefore, not surprising.
Key Features of DApps
Now that you have a fundamental understanding of DApps let’s get more specific and explore the essential elements that make them up.
Free Software. A DApp must be controlled by many parties and be open-source. Both the autonomy and the accessibility of the code are requirements.
Decentralized. It must use a decentralized blockchain to store all of its operating data.
Incentivized. It must be capable of producing tokens as a means of proving value and distributing them as incentives around the network.
Protocol-compliant. Stakeholders in the DApp must concur on a cryptographic technique to demonstrate value. For instance, Proof of Work is now the consensus protocol used by both Bitcoin and Ethereum. The latter, however, intends to switch to Proof of Stake within the upcoming few years.
In conclusion, as the primary distinctions between DApps and regular applications are contained in the underlying blockchain technology, end users may not even be able to tell them apart.
Decentralized Apps Examples
Naturally, it’s a good idea to look at existing DApps before developing your own. The good resource State of the DApps offers facts and statistics on all aspects of decentralized applications.
Three of the top five DApps at the time of writing were created on Ethereum. Five are represented by two from the category of gaming and two from finance.
Tether, a cryptocurrency whose units are backed by an equivalent amount of fiat money, is at the top of the list. It should come as no shock that it is an Ethereum DApp with over 67,000 daily users.
Splinterlands and Upland, respectively, are in second and third place. Both belong to the game industry and are constructed on distinct systems, Hive and EOS.
Clearly, the majority of DApps are on Ethereum. The two industries that are most popular are banking and gaming apps.
We believe we have succeeded in demystifying the fundamentals of decentralized apps. Read on if you’re interested in their benefits and drawbacks.
Decentralized Applications’ Advantages
DApps are becoming more and more popular for a reason. In actuality, there are several. Examine the benefits of decentralized applications to see if your business might profit from them.
Resisting censorship. No organization or government may prevent users from running DApps. The network cannot be controlled, users from submitting transactions, applications from being deployed, or data on the blockchain from being read by a single person. Basically, no one would be able to delete your post on Instagram or prevent you from tweeting if they were both running on Ethereum.
Anonymity. Most DApps don’t require you to use your real identity. You don’t need to complete a laborious enrollment process; all you need is an Ethereum login and a digital wallet.
Nothing is down. As a result of its reliance on a peer-to-peer network, the DApp can continue to operate even if certain components of the network design are disrupted. Once it goes online, it won’t fall apart until the blockchain platform it depends on does too.
Data reliability. The use of cryptography makes sure that hackers cannot fake the data that is kept on the blockchain. Additionally, users have access to the public blockchain to confirm transactions, increasing the trustworthiness of data records.
Integrated Payments It’s not necessary to integrate your app with outside payment processors. As a result, payment processing times are greatly accelerated.
Decentralized applications’ drawbacks
Almost everything has a drawback or a restriction to take into account. DApps are no different. So let’s briefly go through their primary flaws.
Usability. Some DApps have poor user experiences that could be greatly improved. In actuality, getting about might be challenging. However, it’s likely that usability will improve as more businesses adopt blockchain technology.
Maintenance. DApps can be challenging to maintain since data and code published on the blockchain are more difficult to alter. It can be challenging for an Ethereum DApp developer to release upgrades if older versions have bugs or security issues.
Network lag. If a single DApp is utilizing an excessive amount of processing resources, blockchain networks may occasionally get overcrowded. As a result, DApp performance is compromised, which causes poor speed and postponed payment processing.
How Should I Begin DApp Development?
The blockchain industry is giving firms a tonne of new chances. Blockchain technology and DApps will undoubtedly capture your attention if you’re searching for more transparency, security, and efficiency.
You may query at this point how to create a DApp and what the development process entails. Let’s look at each of the procedures below since developing decentralized applications is rather different from conventional custom software development.
1. Determine the issue
It’s crucial to first pinpoint the issue that needs to be resolved or the use case for your potential DApp. Outline your current problems and determine whether a decentralized application can address them.
Do you wish to cut out outside parties from your deals? Or maybe you want to spread information and services outside of a centralized location? In either case, the first step is to identify the issue that a DApp can assist you with.
2. Make a Proof-of-Concept
The next step is to develop a Proof of Concept (POC) that will demonstrate the viability of your idea and validate it. All in all, it will enable you to test your DApp with few resources before investing a lot of time and money in its creation. Consider this step carefully because it can show you where you need to improve and where there are problems.
3. Choose a DLT Platform.
If your POC is a success, you should begin considering execution. You must choose the platform that will serve you best because there are different options for DApp development. Every blockchain platform has benefits and drawbacks, so you should take some time to choose which will meet your needs.
Ethereum is currently probably the best choice because of its smart contract capabilities. To choose what is best for you, do your own research first.
4. Create and evaluate the DApp
You can move forward with designing and testing your decentralized app once you’ve chosen a DLT platform. Make sure the DApp goes through extensive testing, regardless of whether you decide to hire bespoke application development services or construct through an internal team. In the end, you don’t want to release your new software and encounter problems that may have been simply avoided.
5. Start your DApp.
Finally, your DApp is prepared for launch after testing! When launching on the production server, keep in mind that there is no room for error. Remember that after the application is deployed, it is difficult to make adjustments, so don’t rush the procedure.
Since these are high-level processes, it should be obvious that the technical side is far more difficult. Just remember that you don’t have to tackle learning how to create a DApp on your own. Instead, think about asking skilled experts for assistance with the construction of your blockchain-based DApp.
Costs of DApp Development and Their Influences
Since you now understand how to create decentralized applications, your next logical concern is how much it will cost you. Sadly, there isn’t a straightforward solution. Your blockchain DApp development costs are actually influenced by a number of factors, so we’ll focus on the four important ones below.
The cost of development is significantly influenced by the industry in which the DApp will be used. It’s mostly because each industry is distinct and calls for varying degrees of complexity. Certain sectors have stringent compliance criteria that must be met. Some may also have a sizable number of concurrent users interacting with the DApp.
Customers, brokers, and insurers may all need to utilize the same application simultaneously in the insurance industry, for instance. All of these variations have an impact on development costs in the long run.
The complexity of each project varies. Thus this is one of the main variables influencing the price of constructing a DApp. What blockchain technology are you selecting? What stack of technologies will be applied? Will you use a pre-built API, or do you need to design a custom one? The intricacy of your project will be determined by the answers to these questions.
A payment application created around current cryptocurrencies is an example of a low-complexity DApp. On the other hand, building a blockchain platform from scratch would be extremely difficult and expensive.
DApps can either use another DApp’s blockchain, like those on Ethereum or have their own blockchain, like Bitcoin. There are, therefore, three different sorts of DApps, and the development costs of each type may differ slightly.
Has a blockchain of its own, type 1 DApp
Functions on a Type 1 blockchain, a Type 2 DApp. has none of its own
Functions on a Type 2 protocol, Type 3 DApp
Think of Type 1 as macOS, Type 2 as Keynote, which runs on macOS, and Type 3 as an add-on for templates that works with Keynote as an analogy.