In the same way that blockchain technology is seeking to be a functional and unmediated alternative through smart contracts, traditional apps have also sought to find their place within the decentralization space.
What is a decentralized application?
A dApp is a decentralized application that is deployed through smart contracts over the blockchain. They are the decentralized version of traditional apps. Though they do share some features, such as being designed to offer services in finance, entertainment, social networks, video games, statistics, trading, and so on, there are substantial differences in the technologies they use and their management.
As soon as a dApp is deployed on the blockchain via a smart contract, users can interact with the application through their decentralized wallets or web3s, as well as authorize and manage all interactions and transactions.
What is the difference between a decentralized application and a traditional one?
Unlike traditional applications, a decentralized application, as we have mentioned, is built on the blockchain. Without the existence of smart contracts, dApps would not exist, as they are responsible for executing all programmed operations in an automated manner.
It should be emphasized that a decentralized application does not depend on a central authority. Users do not have to go through the intermediation of any private entity to access the application, by simply connecting their decentralized wallets to the application they can access the service or solution they provide.
On the other hand, a dApp preserves user privacy. Users do not need to provide the application with their personal data as a requirement for access, so their data is not exposed to third parties.
Finally, a decentralized application operates in an automated way. It does not need anyone to manage or authorize the transactions that users perform. Thanks to smart contracts, they can perform and authorize with their digital signature all the transactions and interactions they want from their wallets.
Risks you face when using a dApp
The code of any decentralized application based on smart contracts, regardless of its end-product, may contain exploits, making it vulnerable to attacks. However, today many projects create compensation funds to protect their users in case of exploits.
Other risks associated with their use are directly related to the users. Wallets are only accessible by their owners, who must be cautious with their access (private keys, seed phrases).
Regularization and the future of decentralized applications
The autonomous and decentralized nature of the blockchain, and therefore of dApps, has meant a challenge for state regularization. States are currently seeking to regularize cryptocurrency movements to placate possible cases of money laundering or terrorist financing. Therefore, they urge the ecosystem to develop interfaces where users can be verified through KYC (Know Your Customer), and where the regulatory framework is effectively enforced through AML (Anti-Money Laundering).
The dApps are the final step, the end product of blockchain development, without them developers would not be able to showcase new use cases, and users would not be able to benefit from the virtues of decentralization.