Decentralized applications (Dapps) are poised to revolutionize many industries, including digital photography, pensions, employment, education, social networking and others. But what exactly is a Dapp? And how do Dapps work?

What is a Dapp?

A Dapp is an application that runs on a blockchain network instead of a central server. With a Dapp, no company controls the server that the software runs on. Instead, hundreds or even thousands of individual computers run the software for the benefit of the community it is intended to serve. The software is open-source and can be used by anyone. All data and records used by the application are stored on a public ledger, and participants in the Dapp’s community are rewarded with tokens for their contributions to the network.

Here are a few examples of Dapps and the traditional, centralized counterparts they are intended to replace:

Dapp Centralized app
Dtube YouTube
Steemit, Minds.com Reddit, Facebook, Twitter
WorkCoin UpWork
Arcade City Uber, Lyft
Storj Dropbox

How does a Dapp work?

Traditional websites and apps

In order to understand how a Dapp works, it helps to first understand how a traditional ‘website’ or ‘app’ functions. On a traditional website like YouTube, the user connects to the website through a web-browser, and this web-browser runs the website using HTML, CSS, and/or Javascript. This program is what engineers call the “front end” of the application. It is the part of the application that runs on the user’s computer or device. On YouTube, this is the code that causes the page to display.

A second part of the app allows the front-end code to communicate with the website’s server. This is called the application’s ‘API’ or ‘application programming interface’. On YouTube, this is the program that sends a signal to youtube.com whenever the user clicks on a video.

A third part of the app runs on the server itself. Engineers call this the ‘back-end’ or ‘database’. On YouTube, this is the program that loads a video stored on the server’s hard-drive when the user clicks on it. When all three of these parts work together correctly, the result is a functioning traditional application.

Dapps

Like a traditional application, Dapps also have three parts. The first of these parts is similar to the front-end of traditional apps, which provides the interface the user relies on to perform actions on the network​1. For example, on Steemit, a user relies on the front-end to type up messages to post or to comment on others’ messages.

The second part of a Dapp is a set of smart contracts, which allows the front-end to interact with the blockchain. Unlike an API, a smart contract is an agreement between two or more parties that is enforceable through code. For example, the Steemit network includes smart contracts that dictate how many Steem Units a content-creator receives based on how many upvotes he gets. It also dictates how many users will be able to see a post based on the Steem Power controlled by the content-creator who created the post​2. Unlike with a centralized network, these contracts cannot be changed by Steem, Inc. Although the code for the network can be updated, these changes will not affect previous contracts. In addition, because the software is open-source, participants can refuse to implement changes if these changes aren’t wanted. In this way, Steemit, Inc. is essentially forced to abide by its own rules. It cannot demonetize authors or ban them without the community’s consent. Like Steemit, other Dapps have similar smart contracts. For example, Storj has smart contracts that dictate how many Storj coins a storage farmer earns from renting out hard-drive space, and WorkCoin has smart contracts that dictate methods for arbitrating disputes between freelancers and clients.

The third part of a Dapp is a blockchain, which represents the ‘back-end’ of a decentralized application. When a change is made to a Dapp network, such as a video being posted, a freelancer submitting a proposal or a person upvoting a post, this event is recorded on the blockchain that is stored on multiple computers located all over the world. All of the computers on the network have an identical copy of the blockchain, and when one copy is changed, all of the computers are instructed to change their copy. Because of this, it is virtually impossible for a hacker to change the ledger in a way that violates the community’s rules. It is also impossible for a government to shut the network down or an authority to change the rules of the network without the consent of participants.

When all three of these partsthe front-end, smart contracts, and blockchainwork together, the result is a functioning Dapp.

The Benefits of a Dapp

Users of Dapps favour them for several reasons. First, many users believe that the decentralized nature of Dapps allow these apps to offer more freedom. For example, a centralized app may ban certain types of content, even if most members of the community do not want it to be banned. A centralized app may also demonetize or eliminate advertisements from certain content, causing loss of income to participants on the network. However, this kind of behaviour cannot happen in a Dapp since rules are enforced by the community and by the software itself instead of by a centralized company or organization. Second, these users believe that fees in Dapps are lower than those of centralized apps due to the lack of a centralized authority and the competition between users who are paid the fees themselves. Third, users of Dapps say these networks are more secure than their traditional counterparts. as there is no central computer that can be shut down by a hacker or government and no company that can go out of business and leave users without service.

Use Cases for Dapps

Dapps are already being used in several industries. The following provides some examples of these Dapps:

Dentistry – Dentacoin is a Dapp that allows patients to subscribe to dental insurance focused on preventive care. Patient records are kept on the blockchain and, once recorded, cannot be changed by anyone. Patients can choose who gets access to their information, and their decisions are enforced through code. The Dentacoin team believes the system will result in lower costs for both dentists and patients because of its focus on preventive care.

Reputation management – DREP is a Dapp that manages users’ reputations across multiple blockchains and centralized platforms. It allows users with reputation on one platform to transfer information from one platform to another, creating trust with users of the new platform

Digital photography – Wemark is a Dapp that allows photographers to license their photos directly to consumers. Photographers can put restrictions on how the photos can be used if they wish. Wemark only charges 15% fees instead of the 85% fees typical of centralized platforms.

Pensions – Akropolis is a Dapp that uses a token to reward users who find false statements in a report by a pension Fund Manager. This reduces fraud and lowers the cost for honest fund managers to find clients.

Employment – Moonlight is a Dapp that matches employers up with workers. Employers post jobs and workers bid on the jobs by stating how quickly they can get them done. Employers also state how many tokens they are willing to pay for the job. The more an employer is willing to pay, the more aggressively workers will bid on the job. As workers complete tasks, an immutable record of the task completed is recorded on the blockchain, forming a trustless CV the worker can rely on to get jobs in the future

Personal information – Quadrant Protocol is a Dapp that allows users to sell their personal data directly to interested parties, bypassing the big data suppliers and brokers like Google and Facebook. This gives users control over their personal data and allows them to monetize their personal data.

Education – Code of Talent is a Dapp being developed to match up educators with students interested in “micro-learning,” a form of education involving ten-minute video lessons. Teachers are rated by the students for the quality of their lessons and earn tokens based on their reviews.

While many of these Dapps are still in their early stages of development, it will be exciting to see how these potentially revolutionize industries as varied as dentistry, digital photography, pensions, education, and more.

References:

[1] What is a Dapp? https://ethereum.stackexchange.com/questions/383/what-is-a-dapp. Accessed October 22, 2018

[2] Schweitzer, Glenn, What is STEEM and How Does it Work? https://www.quora.com/What-is-STEEM-and-how-does-it-work# Accessed October 22, 2018