Understanding Dapps

Disclaimer: Posts on the HyperTrader blog and associated HyperLinq websites are for educational and informational purposes only. These posts should not be taken as financial advice, nor are they meant to be viewed as trading advice. HyperLinq Inc. or the authors take no responsibility for any damages or losses.

In our journey of understanding decentralized finance and crypto in general, today, well understand the concept of dapps. Decentralized applications or dapps are the critical steps to building a new web 3.0 experience following the ethos of decentralization at its core. So, let’s delve deeper into the concept of dapps, their benefits, and their significance.

What is a Dapp?

A dapp is basically is a decentralized application that runs on a blockchain network or follows a  peer-to-peer network model. From a fundamental point of view, a regular app on your smartphone or laptop has its backend code running on a centralized server and is owned by an entity or a company. Whereas when it comes to dapps, the backend code is running on a decentralized peer-to-peer network.

How do they Work?

As mentioned above, a dapp might look similar to that of a regular app from the looks and feel. However, true magic happens when you look at the backend. So, let’s have a look at the backend of dapps to understand their working.

As dapps work on the blockchain networks, they require smart contracts for their app logic and deployment. By definition, smart contracts are self-executing computer codes that are written on a distributed ledger. In simple language, smart contracts are similar to real-world contracts but stored digitally. The key point is – as they’re stored on a blockchain, smart contracts inherit two key properties  – immutable and distributed. Meaning smart contracts, once deployed on a blockchain network, cannot be changed and distributed across the network, allowing anyone to interact with them.

Therefore dapps are truly decentralized in nature as they’re governed by the logic of smart contracts, not by any governing entity. As smart contracts can hold funds, any dapp built on top of a smart contract can mediate agreements and transactions between two parties with a simple user interface and without any third party or escrow mechanism.

Benefits & Drawbacks of Dapps

The smart contracts on a blockchain network are open for everyone to access. Thus allowing anyone to incorporate an already existing smart contract into their dapp. By leveraging such key ethos of blockchain technology, dapps offer a range of benefits over regular apps. Some of these are:

  • Zero downtime
  • No owners
  • Free from censorship
  • Built-in payments
  • Plug & play
  • Anonymous login
  • Backed by cryptography

Even though dapps offer a range of benefits over traditional apps and mark a shift in how we’ll see and interact with apps in the coming future. Still, there are some drawbacks of dapps that need to be addressed. These drawbacks include:

  • Harder to maintain
  • Network congestion
  • Unpredictable transaction fees
  • Hard to scale
  • Clunky user-experience

In conclusion, it’s still a long way for dapps to become mainstream as the current apps are known among consumers around the world. Still, we’re hopeful that with the rise of web 3.0 and scalable blockchains, we’ll be able to witness the world adopting dapps in the coming years.

#1 crypto trading terminal is here

Become a better Trader. Become a HyperTrader!

Start trading on the fastest, most secure trading platform.

More reads

Cryptocurrency market overview 2021

TL;DR: 👉 Read the report The year 2021 emerged as Spring to a long two-year Winter in the world of cryptocurrencies. A year of new beginnings, with buds of Defi summer on the trees, lighter evenings of institutional adoption, blowing of thaw-winds of new layer-1...

Announcement: Now Trade on FTX Derivatives with HyperTrader

We, at HyperLinq, are delighted to announce the onboarding of FTX Derivatives as our newest crypto exchange to support trading on our native desktop app, HyperTrader. Thus enabling FTX Derivatives traders to supercharge their crypto trading and experience reduced...

%d bloggers like this: