What Is DApp?

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DApps are a new generation of computer applications powered by blockchain technology, and their main features are open source and attack resistance. These applications belong to no one and cannot be shut down and cannot only be stopped.

Does that sound crazy? I’m Alex; researching cryptocurrencies for over five years will help you understand the nature of DApps, types, and the technology behind DApps.

Decentralized Applications Explanation

DApps are digital applications that exist and run on a blockchain or peer-to-peer network. There are three types of DApps according to their scope of use:

Financial appsThey give users tools to manage finances, both fiat and crypto. They can be used to manage savings, wills, and draft some types of full, comprehensive employment contracts.
Partly financial solutionsThey involve dealing with money, but are not the main focus. Self-developing bonus and points systems within loyalty programs are an example of such solutions. These points can usually be exchanged for real finances or tangible goods.
Non-financial applicationsSuch programs have nothing to do with money at all. They can be services for personal identification, for conducting surveys and voting, for creating a system of governmental decisions, and decentralized file storages.

First, to better understand how DApps work, let’s know the essential criteria of a DApp.

What are the Differences Between DApps and Traditional Apps?

DApps are applications that are based on blockchain technology, so they must have a particular set of features:

  • Open code: the source code of the program must be completely open, operate autonomously. And, importantly, have no single controlling entity over its tokens. Improvements and changes are allowed, but all improvements must be made by consensus of all token holders or project shares.
  • Decentralized: uses cryptographic blockchain technology and is hosted on thousands of computers and subsequently executed in parallel.
  • Incentive: tokens (digital coins) that allow access to certain functions of the program, to be a bargaining chip for miners, users, must be in circulation on the application network.
  • Algorithm/Protocol: DApps use a standard cryptographic algorithm to run data mining on a network of nodes.

Traditional centralized applications are managed on a single server. This makes the applications more susceptible to hacker attacks and has a single point of failure.

How Do DApps work?

DApps function by implementing all four criteria we discussed in the first section. This means that a DApp is an open-source software platform implemented on decentralized blockchains and populated using tokens generated using a protocol/algorithm.

An open-source application makes it genuinely decentralized since everyone can see and contribute to the code. It also speeds up the process of scaling product development in terms of both quality and quantity.

Decentralizing the application using blockchain is the next step. The blockchain serves as a permanent register of records/transactions that anyone can access at any time. Each DApp is based on its internal code (smart contract). Thanks to blockchain, DApps are faster and more secure. Finally, tokens are used to add records/transactions to such books, which are mined or distributed using various algorithms/protocols.

What are the Benefits of a DApp?

As we have already said what a DApp is, we can focus on the benefits we get. A decentralized application (DApp) is very similar to a traditional application, but there are few advantages as a result of the use of open source and smart contracts as a fee for removing transactions, in traditional applications the fee can be very oppressive.

The next advantage of DApps is that users can save and control the data, and therefore there is no server to hack. In a decentralized system, there is no central authority, so every decision and transaction must be approved by someone in the network.

Finally, thanks to DApps and blockchain technology, we have access to DeFi, a new financial ecosystem devoid of third-party control. DeFi runs on trusted, distributed networks, allowing anyone to access a wide range of financial products and services from anywhere in the world. This means that people will face far fewer barriers to accessing and using financial services compared to traditional systems.

Examples of DApps

Let’s break down real-life examples to understand better what features DApps can do and how widely they are being implemented in everyday practice.


A project that aims to decentralize the market for freelancers, such as freelancers. The service fees of centralized freelance platforms can be very high and high as 20%. With the Ethlance DApp, clients and freelancers sign smart contracts that will be programmed to issue payments only when the work is completed.


Golem was one of the first solutions to sell unused computing power. The platform defines itself as “a global, decentralized, open-source computer that anyone can access.

What does that mean? If you have unused computing power, you can rent it out to the Golem network, making money on it. There, that computing power is available for purchase as a single package. Anyone who owns a computer or laptop can share computing power with others and get Golem tokens.


A platform powered by Ethereum. It is open source for decentralized insurance and allows users to buy or sell insurance for possible flight delays, cancellations, hurricanes, etc.


Augur combines the advantages of a decentralized network with financial market forecasts. The app is based on a powerful tool that allows predicting trends. The application is based on the Etherium blockchain, i.e., it is the second type of decentralized applications (Type II). Augur allows making predictions about real-world events in its current implementation, not limited to the world of finance. The platform turns customer forecasts into shares that other users can buy or sell.

In conclusion

The field of DAPP is rapidly evolving. Although DAPP developers prefer the Ethereum platform, there are also such platforms as RSK on Bitcoin, Ethereum Classic, Cardano, Lisk, QTUM, and NEO. Also, other large-scale platforms for DAPP are being developed.

I hope that the concept of DApp has become more apparent to you, and if you want to explore the issue of cryptocurrency and smart contracts more deeply, then our articles will help you.

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