What are Decentralized Applications and how do they compare with Centralized Applications?

Blockchain technology has come a long way since its inception in 2008 as the underlying technology behind Bitcoin. Over the past decade, the development of blockchain technology has been exponential, leading to the creation of numerous innovative applications and ideas.

One such innovation is in the field of data storage, which has sparked the creation of decentralized applications, or dApps for short.

A dApp or decentralized application is an application that relies on a shared database maintained by numerous computers(nodes) to store and distribute data, rather than a single location(center). Transactions and data are verified and processed by multiple nodes, making it much more difficult for any one entity to manipulate the system. An example of a decentralized application is the cryptocurrency Bitcoin, where transactions are verified and processed by a network of nodes, without the need for a central authority.

Up until recent years, almost all technologies were built upon centralized systems. However, this is changing as more and more users recognize the advantages of blockchain & decentralized systems over centralized ones.

Advantages of Decentralized Applications –

Censorship resistant – One of the main advantages of dApps is their decentralized nature. With dApps, there is no central authority controlling the data or transactions, making them more resistant to censorship and government control. Furthermore, because transactions are validated by the network as a whole, they are less susceptible to hacking and other forms of cybercrime.

Transparency – Another advantage of dApps is their transparent nature. Because all transactions are recorded on a decentralized ledger, they are easily auditable and publicly viewable.

Reliable – In addition to their security and transparency, dApps offer a more reliable way of storing and transmitting data. Because there is no central authority or server that can be taken down, dApps are more resistant to downtime and other disruptions.

Today, there are thousands of dApps across a wide range of industries. Below are some examples of well-known dApps-

Uniswap – Launched in 2018, Uniswap is a decentralized exchange (DEX) built on the Ethereum blockchain that allows users to trade cryptocurrency tokens without the need for a centralized intermediary.

Filecoin – Filecoin is a decentralized storage network that allows users to buy and sell unused storage space. It is built on the InterPlanetary File System (IPFS) and uses the Filecoin cryptocurrency as its native token. The network provides a secure, transparent, and decentralized way of storing and accessing data, without the need for a centralized intermediary.

Aave – Aave is a decentralized non-custodial lending platform built on the Ethereum blockchain. It allows users to deposit their cryptocurrency assets and earn interest, or to take out loans using their digital assets as collateral.

Opensea – OpenSea is a decentralized marketplace for buying, selling, and discovering unique digital items, such as collectibles, in-game items, and other forms of digital assets. The platform allows for secure, peer-to-peer transactions of digital items without the need for a centralized intermediary.

Wrap Up

Decentralized applications (dApps) have the potential to transform various industries and offer several advantages over traditional centralized applications. However, dApps also face some key limitations, such as scalability which needs to be solved to take this concept mainstream.

All in all, dApps are a promising concept and there’s undoubtedly plenty of room to grow