What is a dapp? Apps with nobody behind the counter

A dapp is an app with no company running the back end, and the best introduction to what that means is still a game about cartoon cats. In December 2017 the busiest thing on the Ethereum network was CryptoKitties, launched that November, and within weeks so many people were breeding and trading digital cats that the whole chain clogged.

Nothing had crashed, though. Go looking for the overloaded server behind the mess and you would have found nothing to unplug, because the game's machinery ran on the blockchain itself, and the blockchain had simply run out of room for everybody at once. CryptoKitties was a dapp, short for decentralised application, and the cats taught a lot of people the hard way that using one costs real money whenever the chain gets busy.

An app with nobody behind the counter

From the front, a dapp looks like any other app, a website or a mobile screen with buttons and forms. Tap a button in a normal app and the tap goes to the company's servers, where the company's code decides what happens next. Tap the same button in a dapp and it goes to a smart contract, a program stored on a blockchain that runs exactly as written, and no ops team is standing by to tweak it when things get strange. Our smart-contract guide covers the engine room, and all you need here is that the backend is public, shared and owned by no one.

Bitcoin proved a chain could move money around, then Ethereum, live from 30 July 2015, let a chain run programs too, and a program with a front end bolted on is an app. That launch date is why nearly every early dapp story is an Ethereum story.

What people actually build

Trading leads: Uniswap, launched in November 2018, is an exchange with no order book and no staff, where prices come from a formula run against pooled funds and anyone can trade against the pool at 3am on a Sunday. Lending dapps such as Aave and Compound pull the same trick for borrowing, matching lenders and borrowers with code rather than a credit desk. OpenSea, founded in 2017, became the flea market for NFTs, and the cats themselves were early stock on its shelves. And there are games, of which the kitties were merely the first to matter.

Strip the branding off any of them and you find the kitties again: the service is a contract on the chain, and the company, where one exists at all, mostly maintains the website you reach it through.

Using one feels different inside a minute

The first difference is the login: there is none, no email, no password, no verification code. You connect a crypto wallet, the wallet becomes your identity, and each action you approve goes out as a transaction it has signed for the chain to check.

The second difference is that everything you do costs money. Breed a cat and you pay, list it for sale and you pay again, because each on-chain step buys space in a block, and the fee for that space is called gas. Ethereum reworked its fee mechanics in August 2021 with EIP-1559, and none of it changed the rule underneath, because a crowded chain still makes every action dearer, exactly as the cats had shown in December 2017.

The third difference decides whether any of this is for you. Try getting a password reset on a dapp, or a fat-fingered midnight transfer quietly reversed, and you find there is no desk anywhere with those buttons on it. No company holds your funds while you use the thing. You wanted nobody standing between you and your money, and you got it, including on the day you make a mistake.

What the cats proved

CryptoKitties got laughed at as a toy, and then the toy congested a global network in December 2017. People had queued for an app with no company behind it, and the chains of that era could not fit the crowd, so a lot of what came after, faster chains, layer-2 networks, the 2021 fee reform, is downstream of that one absurd week.

Where dapps go wrong

Now the uncomfortable bit.

On 17 June 2016, an early investment dapp called The DAO was drained of roughly 3.6 million ETH through a flaw in its contract, and years on it is still the story auditors tell juniors. The code is the operator, so a bug in the code is a hole in the vault, and code holding money attracts people who read it more carefully than its authors did.

The everyday risk sits closer to home. Many dapps ask you to sign a token approval, which is standing permission for their contract to move a token out of your wallet, and if you sign one carelessly, or on a malicious site, you have handed over the power to drain whatever you approved, with no further questions asked. People who use dapps regularly go back and revoke approvals they no longer need, which is dull housekeeping, and it has spared a lot of wallets.

And the least technical trap of all is the fake front door. A dapp's website is usually an ordinary website, and scammers buy search adverts for pixel-perfect clones of popular dapps, wired to a draining contract. The chain half of a dapp is brutally hard to fake. The website half is easy, cheap even.

Getting to the starting line

To try any of this you need two things: a wallet, and some of the chain's own coin to pay gas with, which on Ethereum means ETH. Our wallet guides cover the first, and for the second an on-ramp turns ordinary money into crypto. Banxa has run that plumbing since 2014, with more than 100 payment methods across 100-plus countries, in the markets it serves. Card orders typically complete within about 10 minutes of issuer approval, and a locked quote holds for roughly 3 minutes.

Then start tiny: connect a wallet to one well-known dapp, make one small move, and read what the wallet asks you to sign before you approve it. This is an explainer, not financial advice. But reading the signing prompt before tapping approve is the entire skill, and the people who lose money are mostly the ones who never did.