What are dApps?

Internet users are reclaiming their power.

For the first time, you may become not only an app user but also its owner, and benefit financially from using the internet.

This is what dApps (Decentralized Applications) are promising.

But what are dApps, and how can you use them?

Let’s dive in.

dApps are like regular apps, but they run on a peer-to-peer network, such as a blockchain.

However, unlike traditional apps, dApps operate without any human intervention and aren’t owned by any one entity, but rather distribute tokens to their users that represent ownership.
To connect to a dApp, you’ll only need a crypto-wallet and an internet connection.

Governance = power

By using a dApp and receiving its token, you then become one of the owners, along with the other users, and can participate in its governance.

Some protocols might even add more privileges and rewards to the governance powers.

Once you want to leave your position as an owner, or reduce it, you can always sell your tokens, which, depending on the dApp’s popularity, might allow you to make a good profit.

Key features of dApps

Open-source: The code is public for anyone to look at, copy, and audit. (This is changing with new dApps, more on that later).
Smart contracts: They automatically execute certain rules on the dApp.
Public: All data and records, including historical transactions, must be public.
Decentralized: Nobody can stop the users from using the app, so nobody’s completely in charge.

For visual learners, here is a video linked on the Ethereum website:

Benefits of dApps

Once deployed, the dApp code cannot be removed, even if the people who built it disbanded, and anyone can use it.
Zero downtime: Once the dApp is live, it will only go down if the network itself goes down. Big and well-established networks like Ethereum, for example, are less likely to experience downtime than smaller networks.
Privacy: There’s no requirement to provide a real-world identity to deploy or interact with a dApp.
Censorship resistance: No single entity on the network can prevent you from using or even creating a dApp.
Data stored on the blockchain is immutable and made public, which is useful for tracking projects and origins of funds.
Trust-less/verifiable behavior: The user can audit the smart contract and know what it’s going to do before engaging with it.

More on smart contracts on the video below:

Disadvantages of dApps:

Maintenance and performance: It’s hard for developers to make updates to their dApps and to increase their performance once they are deployed. This is because the code is harder to modify, even for bugs or security risks identified in an old version.
Network congestion: When a dApp receives too many requests, not only do transaction fees rise, but transactions may also fail.
User experience: It’s still difficult for the average end-user to interact with the blockchain in a truly secure fashion. The learning curve can be harsh for web2 users.
Some Centralization: Sometimes, user and developer-friendly solutions may end up looking and acting like centralized services, negating the benefits of blockchain.

What are dApps used for?

There are several categories of dApps, which are used to offer services related to cryptocurrencies, and those services are expanding daily.

Here are the most established categories for now, in 2022:

Decentralized Finance (DeFi)

DeFi dApps focus on building financial services using cryptocurrencies, which opens an entirely new perspective for people that own crypto and want to avoid selling, but who need liquidity.

Traditional finance won’t consider cryptocurrencies as a collateral asset when you require a loan, but DeFi will and won’t ask for your personal data.

This is especially interesting for people who are experimenting with financial censorship or discrimination in their countries, or for businesses centered around crypto and blockchain whose loans are getting…