A structured, centralized structure that provides order and standardization for transactions has served as the basis of the financial sector and the entire business environment. Why would you want to alter a system that has been effective for decades, especially by introducing Decentralized app Development (Dapps)?
And yet, this is precisely what is happening now, as the list of benefits associated with a decentralized model grows and new applications, such as Ethereum, emerge.
A white paper on decentralized applications, also known as dapps, has outlined several reasons for building them, including their adaptability, transparency, and resilience.
What are Dapps?
According to the dapp white paper, for an application to be considered truly decentralized, it must:
- Be completely decentralized and open-source, with no entity controlling most of its currency.
- Have all users sign off on protocol modifications and enhancements.
- storing all of its operational data and records on a public blockchain in a cryptographic format;
- Utilize bitcoin or a native blockchain-based currency. This facilitates miner accessibility and future contributions to its value; and
- When generating tokens or money, employ a standard cryptographic algorithm.
To provide a comprehensive overview of dapps, they have been categorized into three groups:
- Distributed applications of type I utilize the blockchain. These are known as alternative cryptocurrencies and include Bitcoin, Litecoin, and others.
- Type II decentralized applications utilize a Type I decentralized application’s blockchain and possess their protocols and utility tokens to provide the required functionality. Omni Protocol is an application of Type II decentralization. This type resembles a piece of software.
- Type III applications adopt the protocol of Type II applications. They possess tokens. The SAFE Network employs Omni Protocol. This category serves a specific purpose or requirement.
Consequently, each type of decentralized application builds upon the preceding for future applications.
The Case for Dapps
There are numerous ways in which dapps add value:
- It optimizes digital resources by facilitating the monetization of previously difficult assets, such as content and other digital assets. A decentralized application can also exert competitive pressure that modifies the pricing of digital resources for a broader range of values to serve a greater number of users.
- Dapps establish consensus through the use of work-proofing mechanisms. This is the amount of labor each participant contributes to the decentralized application’s operation. Mining and proof-of-stake mechanisms ensure that no one gains control of the decentralized application.
- It functions as a mechanism for token distribution through development, fundraising, and mining. Multiple token distribution methods offer greater flexibility and opportunity than a centralized system administered by a single institution.
- It offers completely novel methods of operation and transaction. Dapps can be used to enable embeddable records, such as smart contracts; fraud prevention via the use of tokens; or the advancement of the function of money, as Ethereum is doing by building decentralized autonomous corporations (DACs).
Dapps in Action
Consider several examples of decentralized applications. These will demonstrate why decentralized applications should be developed. It describes how they are influencing the present and future of numerous industries:
- The SAFE Network is dedicated to offering Internet users the highest level of security.
- Factom simplifies the enhanced recordkeeping process for big data management.
- Ethereum has developed a programming language that allows developers to create decentralized applications on the Ethereum blockchain, with exciting results addressing various consumer and business problems.
- BURST solves the problems that make cloud storage expensive and unreliable. MaidSafe and StorJ have implemented a decentralized data structure for public and private cloud storage, respectively.
- Blockout provides a multi-signature system for sharing sensitive data with third parties.
Build Dapps, and They Will Come
This brief list of dapps revolutionizes how we work, live, and conduct business. This decentralized environment demonstrates its ability to generate more innovation and solutions to persistent business and consumer problems.