What are Dapps?

The Ethereum cryptocurrency platform has been responsible for a number of valuable contributions to blockchain technology. Perhaps the most impressive of these contributions are decentralized applications. Often referred to as Dapps, decentralized applications have the potential to allow individuals to create their own apps which function independently without the need for third-party oversight.

A Distributed Smart Contract System

It can be hard to define a Dapp because the technology behind decentralized applications is so new. The best way to sum up the concept in a few words is that these applications are a distributed smart contract system. They bring together the users of apps and those who provide them without the need for a middleman. Imagine something like Twitter or Facebook that completely removed censorship. Once your Tweet or Facebook post was published, it would become a permanent part of the blockchain record. That’s just one example of the kind of decentralized application that could possible be built with a distributed smart contract system.

Granted, that example is not the best or the most comforting. Some people wouldn’t like the idea of a permanent record of their social media interactions being created. Dapps can be used for far more than managing social media, however. Although a precise definition of decentralized apps is still being formed, there are some attributes that are common. These include:

  • An open-source, autonomously-managed code
  • Storage of records and data on a blockchain to prevent error
  • Cryptographic tokens associated with the applications to facilitate a means of exchange

These are characteristics that many Dapps share, but they are not a definitive list. As the technology behind Dapps becomes more developed the definitions will certainly change.

The Three Types of Decentralized Applications

Most would agree that decentralized applications fall into one of three categories. A Type 1 Dapp is that which has its own blockchain. Bitcoin would be one example of this type of decentralized application. Type 2 applications are those which use an existing Type 1 blockchain but also have their own protocols and tokens. An example here would be the many altcoins that are built on the Ethereum platform but function independently. Finally, the Type 3 decentralized application is one that uses the protocols of a Type 2 but incorporates its own digital tokens.

If all this sounds confusing there is an easier way to sort it all out. The Ethereum white paper was somewhat specific in defining the three types:

  • Dapps that manage money
  • Dapps that involve money but also require other protocols
  • Dapps that are meant to handle other matters such as governance and voting systems

You can think about a Type 1 decentralized application as a way for individuals to exchange tokens for a given service or contract. The network or blockchain serves to create a permanent record of such transactions. The Type 2 would also involve an exchange but require some input from the outside world. Perhaps this type of decentralized application would initiate a transfer of funds when certain automatic conditions are met. A Type 3 Dapp has the potential to create a Decentralized Autonomous Organization, or DAO, where there is no company leaders. Rules are established about voting and governance, and these rules are automatically triggered by the Dapp.

In the coming years it will be interesting to see how developers manage the use of Dapps to perform all sorts of tasks. This is just one of the many ways that blockchain technology is altering the digital landscape.

Read More:

How Do Ethereum Smart Contracts Work?

Transactional & Monetary Properties Of Cryptocurrency