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DApp stands for decentralised application. These are apps that are developed on blockchain technology. One of the most popular blockchain networks that predominantly develops smart contracts-powered applications, is Ethereum.
What’s cool about them is that they function just the way a traditional smartphone app would, and users won’t even be able to point out notable differences. Except, DApps offer a variety of streamlined features that traditional apps don’t.
Decentralised apps provide users with unique ways to manage their personal finance. When you talk about traditional finance such as borrowing and savings, etc. it is essential to keep in mind that all conventional finance activities are regulated and operated by a central authority such as banking institutions.
A Glimpse into DApps
A typical smartphone app such as Facebook or DoorDash is designed to function on a system that is owned by a company. This means they have unconditional control and authority over how it operates and the types of features it will provide. Sure, these apps may potentially be managed or run by different entities, but by and large, everything is centrally controlled by one organization.
In the context of DeFi crypto, DApps are designed to function on blockchain networks based on open-source technology, providing users with a decentralised ecosystem. This unregulated environment offers users complete independence to manage their finances, trade, and investments without the prying eyes of a federal institution or any other third-party intermediary.
For example, a developer can generate a DApp similar to Facebook and launch it on any blockchain network, allowing users to post messages. And once their messages are published, nobody has the power to delete them. This includes the developer of the DApp.
Powerful Advantages of Decentralised Applications
Here are some exciting reasons why DApps are the future:
No Room for Censorship
DApps are designed not to have any point of failure. This means they are virtually impossible to be regulated or controlled by a federal body. Not even the most powerful company in the world can gain authority on the network. For instance, no government can regulate or keep track of your yield farming.
Because DApps are built on blockchain technology and are open-source, the DApp will be up and running until the blockchain is supported by users. It completely depends on the number of users operating the blockchain. So, even if one area of the network goes down, the DApp remains unaffected.
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DApps are built on smart contract technology, which means they can incorporate digital assets and currencies, allowing users to trade stablecoins, meme coins, and altcoins without any fear of scrutiny. You have complete control over your digital investments.
Based on Open-Source
DApps that are based on open-source software are perpetually open to constant improvements and enhancements by various developers. The ecosystem doesn’t depend on any single developer or company.
Some Considerations of Decentralised Applications
Although DApps show enormous potential in terms of eliminating third-party entities and government regulations, there are some disadvantages you should keep in mind as well.
Because many DApps are designed to run on open-source smart contracts, it is logical to say that the networks aren’t completely devoid of bad actors and cybercriminals. Prolific hackers have the technology and the expertise to easily gain access to the source code and penetrate the network in search of vulnerabilities.
The Number of Users
Just like apps built on Web 2.0, the efficiency and effectiveness of DApps primarily rely on the number of users of those apps. You need to have a large number of developers and users to constantly ensure the DApp runs smoothly.
Popular Use Cases of Decentralised Applications throughout the Globe
While DApps have predominantly disrupted the traditional finance industry, they are also responsible for innovating a lot of other industries throughout the world. In light of this, let’s peer into how DApps benefit industries such as social media and gaming.
When it comes to financial markets, lending and borrowing businesses can leverage DApps to streamline their operations. With traditional finance entities, such as banks, the lender earns a base interest rate depending on the amount of money saved.
So, the more cash you have in your savings, the more interest you earn. This is good for the bank because it can, in turn, lend out money on a bigger scale. But, at the same time, the bank also acts as a central governing authority. And it will always take a bigger share of the profits.
With DApps, DeFi yield lenders have the opportunity to bank 100% of the profits in the form of interest. Why? Well, that’s because there are no banks and brokers involved. You have more control over how much you lend and the terms of the loan.
This is why cryptocurrency has become so mainstream. You can trade on decentralised exchange platforms and store your digital assets in vaults that only you have access to.
Social Media Platforms
DApps are ideal for social media users. There’s no fear of censorship, which means DApps enable the true essence of free speech. But that doesn’t mean anyone can promote hate speech. For example, it is solely up to the community of users to unanimously decide which posts should be deleted. The administrator or DApp creator has no say in it.
On typical social media networks such as Twitter, it is the parent company that makes all the profits generated by ads and individual tweets. It thrives on income generated by advertisements and marketing. But this also means that you, as a Twitter user, don’t get anything. However, social media-based decentralised applications are designed with features such as a tipping system. Decentralised social media networks now have the capability for optimised profitability for not just the platform, but for social media influencers as well. You can potentially generate a decent income stream via NFTs and digitised assets that are flowing through blockchain-powered social media platforms.
The Gaming Industry
One of the most interesting use cases of decentralised applications is gaming. At present, games need countless hours for players to build and evolve their in-game characters.
And this takes a lot of patience, but most of all, it takes a lot of money, too. But all those micro-transactions to equip better weapons and skills will mean zilch if you decide not to play the game anymore.
DApps have provided a pretty exciting solution to avoid this problem. It adds more value to your gameplay, especially when it comes to converting your worthless in-game points to tradeable fungible or non-fungible tokens.
For example, you can play games like CryptoKitties, where you can develop an NFT (non-fungible token), evolve it, and then later, sell or trade it with another character or cryptocurrency.
So there you have it. A comprehensive look at how decentralised applications sit on the very cusp of a digital revolution.