What Are DApps and Why Do They Matter?

At its most basic level, the phrase ‘decentralised application’, or DApp, stands for blockchain technology and any of its use cases. The more specific meaning usually assigned to it, however, explains it as an application that uses the blockchain to replace the back end of a server.

DApps are the foundation upon which currencies like Bitcoin and Ethereum are built. They are open-source, they are decentralised, they have an inbuilt consensus mechanism and they offer some form of incentive to self-sustain. In essence, they dictate the decentralised nature of cryptocurrencies like Bitcoin and are contributing to exciting changes in the digital world.

Advantages of DApps

As Bitcoin and other cryptocurrencies become increasingly popular, it is clear the DApps are filled with advantages that even banks or physical cash cannot compete with. This includes:

  • The use of the blockchain. 
    This clever network removes the possibility of one single point or node causing total network failure. The interconnectedness of the blockchain means that it cannot be shut down from an authoritative source and instead, is stabilised by the nodes of the peer-to-peer (P2P) network.
  • The most secure paper trail. 
    The blockchain is known for its infallible data integrity – meaning that once something is added, it cannot be changed, reversed or deleted without permission.
  • Updated in real-time. 
    Completely changing the game is the public ledger within DApps, a ledger that is accountable and only editable with consensus from all involved. In January 2009, with the creation of Bitcoin, we saw for the first time a P2P network that was able to not only host but also maintain a public ledger in real-time through consensus.

Early Beginnings to Bitcoin

In the era before cryptocurrency, ledgers were maintained by trusted centralised organizations such as banks and technology companies. However, centralised architecture, such as a server back end, offers single points of failure and attack.

As early as the 1980s, innovators tried to find a way to secure value expressed in digital form and to achieve Byzantine fault tolerance, or the ability of independent nodes to coordinate and form consensus in distributed systems.

In essence, these individuals were showing the beginnings of concepts similar to Bitcoin. While they described a public ledger for tracking transactions, they were unable to imagine designs that worked without a trusted central authority.

In 2009, the person or group known as Satoshi Nakamoto found a solution to almost every technical obstacle that stood in the way of DApps. To protect the system from attacks, Satoshi designed a solution that included game theory, a consensus protocol, and a mechanism to incentivise participants.