Cryptocurrencies are getting more and more news coverage.
Usually it’s more about Bitcoin hitting an all-time high, or it has huge fall
down. But sometimes they do talk about the revolutionary potential of the blockchain
technology even if sometimes it’s about CryptoKitties taking over the internet.
However, main feature was left out of the cryptocurrency news that Cryptokitties
is part of one of the new and revolutionary decentralized application (DApps)
and its promising future within the cryptocurrency ecosystem. Even if for now
it’s somewhat underappreciated the subject matter like CryptoKitties. DApps
will become increasingly important in taking the cryptocurrencies to the
What is a Decentralized Application
most services that you receive come from centralized sources; services like
gmail, facebook, ebay, paypal, Uber, banking, voting, records (house, car
etc.). All these services could be provided in
decentralized manner using decentralized applications (dapps) like
we can use Bitcoin as an examples of one of the Dapps. The Bitcoin is a Dapp that
provides its users a P2P monetary system that provides online payments. The
significant feature of the Dapp application is that it’s not controlled by any
Also, today, most internet users don’t have control over the
data they shared on different websites.
Dapps like Ethereum, NXT and other similar cryptocurrencies
are unique in their effort to use the blockchain as a way to rectify the
problem of initial internet architecture.
The importance of DApps can easily be understood when you can
recognize issues they are attempting to solve; those issues are the control
over one’s data. When someone is using Facebook, you are interacting with other
users on the platform be that liking, commenting or anything else. So, when you
do anything on the Facebook, you are providing data to Facebook. When, Facebook
receives it, it’s storing that data and then sells that data to advertisers,
release your data to governments, politicians or anything else they can think
of. Many people are not comfortable about their data been treated this way. It
would be better if you kept control over your own data. DApps provide control
over user’s own data, by providing that none is in charge of any user’s data.
So, in the nut shell it would be a “decentralized appstore”.
There anybody would be able to distribute their own unrestrainable apps. The
difference between today’s apps like Gmail and dapps is that dapps don’t
require a go-between to work or to manage any personal information. It will
connect users with providers directly. We can use CryptoKitties as one of the
examples of those unrestrainable DApps.
Essentially, DApps are programs that combine the power of
smart contracts with blockchain technology to produce decentralization, which means
that after application is launched no single entity can exercise control over
any DApp. For example, if we launch decentralized Facebook like platform, once
a post is made it would be resistant to any censorship, same as blockchain
itself is unchangeable.
Smart contracts are self-executing contracts. They are devised
to enforce an agreement established between two parties. They are formed to expedite
the exchange of money, or anything else of value. Because of that they can be
used to build the whole ecosystems within a DApp.
In one example we can use this concept to design a
decentralized Twitter similar to EtherTweet. It would be resistant to
censorship because once you publish a message to the blockchain, it can’t be
erased by anyone, even the company that created the system itself.
DApps on the Ethereum Blockchain
Today, the Ethereum blockchain is the most advanced network
for the creation of DApps. It even has its very own programming language,
Solidity. Developers can build DApps on just about anything. The DApps that
have been produced so far provide us with a lot of thoughts about where in the
future it can take us.
Some examples of Ethereum DApps are:
Golem: Golem is an
open source and decentralized supercomputer that anyone can access. The Golem’s
computational power of comes from the combined power of all users’ machines,
from personal computers to whole data centers. It’s decentralized sharing
economy of computing power. When using Golem, users are able to rent out their
computing power to those who need it. So, if someone has extra computing power,
he could make some money by renting it out.
Ethertweet is a decentralized blogging platform. It has features that are
similar to Twitter. However, because its a DApp, EtherTweet offers additional
benefits of immutable blockchain and provides an uncensored social network.
There are several
characteristics of the dapps the main are they’re open source and don’t have a
central point of failure.
For an application to be truly decentralized it usually must
meet the following requirements:
Open Source: The application’s code base must be widely
available so as to allow for public scrutiny.
Decentralized: The application’s data must be cryptographically
stored on a public and decentralized blockchain.
Incentive: The application must utilize tokens/digital
assets to reward its network supporters.
Protocol: The application must produce tokens utilizing
cryptography with consensus algorithm to show proof of value e.g. proof of work
or proof of stake.
There are three main
types of dapps
For example, the ethereum white paper splits dapps into
apps that manage money,
In this type of dapp a user may need to transfer
token in order to settle a contract with another user by utilizing the
network’s nodes in order to enable the distribution of this data.
apps where money is involved (but also requires another piece),
In this type of dapp, app mixes money with
information from outside the blockchain.
apps included in the “other” category would include different
administrative, government and voting systems.
If bitcoin can do away with financial
authorities, is it possible to do the same for companies and other types of
Even though I only mentioned only several DApps, there are
many other DApps that have the potential to take the cryptocurrency mainstream.
Here are just some of them: TenX and Augur are some of the interesting DApps to
follow. Currently, cryptocurrencies have considerable media coverage. Which is
mainly related to Bitcoin’s huge market growth and falls. However, I believe
that media coverage will shift from Bitcoin, to DApps because many DApps are
still in their developmental stages including some that maybe only drawing
boards. Which is likely to change very soon. As some truly amazing concepts
will hit the market.
Decentralized autonomous organizations are one particularly
ambitious breed of dapp (this is explained further in ‘What is a DAO?’).
The main goal of the DAO is to form a leaderless organization,
formalize rules in to the program code such as how distribute funds, how to
vote and then release the code to the wild.