A DApp or a decentralized application is a computer application that runs on a distributed computing system. It has been popularized by distributed ledger technologies like Ethereum blockchain.
They can run on both peers to peer networks and in a blockchain network. DApps have been around since the launch of Ethereum and smart contracts. This article highlights the decentralized future of the crypto industry provided by DApps. Let’s see.
DApps are entirely different from normal web apps. If an app meets the following characteristics, then it’s a DApp.
- Open-source- source code of the application should be available for all
- Decentralized- should use any cryptographic technology like blockchain
- Incentive- should have any digital asset
- algorithm/protocol- generate tokens and should have a consensus algorithm
A DApp is an application that doesn’t run on one server but controls the excess power of the thousands of computers globally and that can be controlled by business automation software that ensures if a specific parameter is met, only then can a function be carried out. It creates an innovative open-source software ecosystem that is safe and secure. Based on the blockchain model used, the DApps are classified into three. They are:
Type 1: Type 1 decentralized applications have their own blockchain. For example Bitcoin.
Type 2: They use the blockchain of type 1 DApps. These are protocols and have their own tokens for their functions.
Type 3: Type 3 DApps use the blockchain of type 2 DApps. Eg: SAFE protocol uses the Omni protocol(type 2) for issuing safe coins.
DApp wallets or smart contract wallets are becoming more popular now. Apart from storing your private keys, DApp wallets make the cryptocurrency experience enjoyable and secure. Some of the commonly used DApp wallets are:
InstaDApp is one of the most common smart contract wallets that lets you lend and earn through algorithmic interest. It optimizes and manages your holdings across different protocols.
Metamask helps you to make easy transactions through Ethereum tokens and allows you to interact with DApps on a web browser.
It is a DApp wallet acquired by Binance and supports multiple cryptocurrencies. Like the Metamsk wallet, the Trust wallet also allows you to interact with DApps on a web browser.
The DApps exist and run on the blockchain network in a public, open-source, decentralized environment and no central authority has the right to interfere in it.
The dApp functions by implementing all the four criteria mentioned above. The blockchain act as a public and permanent ledger of records or transactions to which anyone can refer at any time. To add records to the public ledger, tokens are used.
These tokens are mined using different consensus algorithms/protocols. Most commonly proof of work and proof of stake is the consensus algorithm used for mining.
Proof of work is used to confirm transactions and to produce new blocks to the chain in a blockchain. The proof of stake algorithm is entirely different from the proof of work algorithm. It states that a person can mine according to the number of coins he/she holds.