When exploring the world of blockchain and its endless possibilities, it’s likely that you’ve come across the term “dapp”. But what are dapps? In this piece we explore the concept, decipher their place in the industry, and look at how they feature in the movement toward the next generation of the internet.
What is a dapp?
Decentralized apps, or dapps as they’re more commonly known, are software applications that are built on top of a decentralized platform. Instead of being built on one computer, with one single entity in control, dapps utilize a network of computers based anywhere around the world.
With multiple computers operating and maintaining the network, dapps are able to incorporate many streams of content consumption, be it providing content, trading or consuming it. Ethereum is currently the biggest host to dapp development, however, there are many other platforms that have shown significant dominance in the space.
The advantages of dapps
Compared to standard web apps, like Twitter or Uber, these apps can handle multiple users but only one authority has control over the backend of the app. Dapps provide a more decentralized and secure approach. So while Uber connects passengers to drivers through the app for a portion of the service payment, dapps essentially allow the drivers and riders to connect directly, taking no payment for the connection.
Another advantage to the world of dapps is that all transactions are transparent and stored on the blockchain of the network it is built on. Dapps also need a token to operate, which enhances the security of both the dapp and the transactions taking place. Typically dapps are also open source, allowing other developers to view the code and further drive development in the industry.
The disadvantages of dapps
As with anything in life, there are also disadvantages. As the world of dapps is still in its infancy stage, the user base is relatively low. When it comes to blockchain-based projects, the more users a network has the higher functioning the network is. Unfortunately, many dapps still have a relatively low user base decreasing the functionality, however, that doesn’t speak for all of them. As the blockchain and crypto worlds continue developing and reaching wider audiences, both the usability and users will increase.
Another disadvantage is the potential vulnerability to hacking. As most dapps are created using open-source smart contracts, this leaves them open to potential probing from hackers. This isn’t a given, however, it has happened in the past that hackers found weaknesses in the network and were able to conduct illicit activities through them.
How many dapps are there?
According to a dapp monitoring website, DappRadar, in December 2022 there were almost 13,000 dapps in the industry. These are spanned across a wide range of networks, including the likes of Ethereum, EOS, TRON, NEO, and more.
State of the Dapps also noted in Q2 2023 that the dapps within the DeFi sector now dominated the space, overtaking the previous top sector, gaming. DeFi dominance jumped from 23% to 32% in one quarter while gaming dapps dropped from 45% to 37%.
Dapps cover a broad range of subjects, catering to industries like energy, exchanges, finance, gambling, games, health, identity, insurance, marketplaces, media, property, security, social, storage and wallets.
Web3: the decentralized net
The transition from Web2 to the decentralized web, known as Web3, marks a revolutionary shift in the internet landscape. This evolution is driven by blockchain technology, paving the way for a more transparent, secure, and user-centric online experience. The movement toward Web3 is closely associated with dapps, which empower users with unprecedented control over their data and information.
Web3 allows individuals to take ownership of their digital presence, allowing for enhanced privacy and real data ownership. As traditional websites give way to dapps that operate on distributed networks, the need for centralized intermediaries falls away enhancing user sovereignty.
In this new era, Web3 unlocks the potential for a more democratized and empowering internet, where users have greater autonomy and control over their online interactions.
The power of dapps
While many dapps may still only be in the experimental phase, there is a large amount of money circulating in the industry and millions of users indicating a promising market. Thanks to dapps’ wide use range and the amount of innovation in the space at present, the dapp industry is likely to continue growing and become a permanent fixture in many peoples’ lives, whether crypto-inclined or not.
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