An Introduction to Decentralized Applications (Dapps)
What are DApps and why do they matter?
Decentralised applications, or DApps, are the foundation upon which currencies like Bitcoin and Ethereum are built. They are open-source, they are decentralised, they have a 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 the DApps are filled with advantages that even banks or physical cash cannot compete. 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 authority source and instead, is stabilised by the nodes of the peer-to-peer (P2P) network.
- The most secure paper trail. The blockchain is infamous 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
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 infamous 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.