If you are familiar with blockchain, you surely know how decentralized the blockchain is for your cryptocurrency needs. By connecting to a peer-to-peer (P2P) system, blockchain users no longer need a central authority figure to manage them, especially in decentralized applications (dApps) schemes.
What Are dApps?
The internet applications that we use every day are updated and redesigned by the design companies every day. While this is great because the app is not neglected and continuously maintained, it is purely the property of the company.
From this fact, sometimes, opinions of application users after the release of new updates are ignored. This can happen due to a difference between the vision that the company has of its property application and the wishes of users who have tried the application firsthand.
In this case, crypto users do not want to linger, waiting for an official authoritarian party to develop crypto applications for users. As we know, blockchain systems provide the ability and power for cryptocurrency users to manage their systems on their own without any central authoritarian figure. Now, blockchain management can be done by all members who can become stakeholders with the same level of ability.
Like decentralized autonomous organizations (DAO) and decentralized finance (DeFi), dApps do not have a rigid, inflexible, and very strictly-organized hierarchical structure from top to bottom. Instead, they have an open-source system so that no one can have a monopoly over the entire system.
Why Decentralization is Important
The issue of technology decentralization may sound trivial, but today it is an issue that is always relevant. With the increasingly connected government authorities with the development of an increasingly sophisticated technology industry, increasingly stringent "regulations" are said to guarantee the security and convenience of using information and communication technology networks.
However, what if that's not the case? This kind of anxiety then encourages many people, especially cryptocurrency users and NFT enthusiasts, to use other alternatives to make transactions and buy assets without many intermediaries that make it difficult for them.
While apps developed by a well-known tech company are good and often reliable, this is not enough to ease many people's anxiety. The potential for data leakage, data manipulation, obtaining our personal information by these companies, and so on makes some people think that the decentralization of information technology is a must.
At this point, dApps become the best alternative for people who want to use applications where they can be more proactive in determining their roles and decisions when using them.
How Do They Work
At this point, how do dApps work? Basically, dApps use smart contracts, a type of back-end code used in a decentralized network. If you've ever heard of smart contracts, you'll surely find they're also used in DAOs.
Although decentralized applications other than dApps also exist, several criteria need to be met for an application to be called a dApp. The criteria are as follows:
- - Secured by a cryptographic token is a must
- - Publicized and transparent data and records
- - Open-source with no monopoly of a single person or group
Although these three criteria are standard criteria for a dApp, not all developers have to strictly adhere to all three for their dApp to be called that. However, it is better if these three criteria are met so that the public knows this is a transparent application.
Since many dApps are linked to the Ethereum system as the largest blockchain today, many of these dApps also use the existing smart contracts on Ethereum. Therefore, payments in various dApps can be linked to a cryptosystem. In this way, cryptocurrency transactions can be carried out smoothly without any fear of interruptions while the transaction is in progress.
Advantages and Disadvantages
As we previously explained, one of the reasons why dApps have become popular is because people are afraid of the control of leading technology companies over their personal data. Although these companies are always trying to secure their databases, illegal hackers and criminal actors are also always looking for loopholes to be able to get that confidential data. When hacks and data leaks finally occur, users can be very disappointed with the performance of these companies in protecting their personal data.
So, how do dApps convince users that they are more trusted and secure than centralized apps? One way is to show that they don't have a central database. Without a central database that is vulnerable to being targeted by hackers, they don't know what to target more precisely to get the personal data of dApps users.
Moreover, dApps do not ask you to enter your personal data if you want to make a transaction. Because you are using a pseudonym, the risk of data leakage can be minimized so that no personal data can be compromised by hackers from the dApp.
While dApps may look convincing, keep in mind that they are still in a formative stage and have not yet achieved mainstream success. As for the shortcomings that dApps currently have, they are still not popular for other than cryptocurrency users.
One of the most glaring drawbacks is the lack of scalability in dApps. The problem is, that you need to scale your designed application if the application will be used by many people and has the risk of network congestion.
As long as cryptocurrencies continue to maintain their popularity as a payment method today, decentralized applications will remain popular as accompanying applications. With the issue of data privacy and data leakage continuing to be a hot issue today, people will continue to look for alternatives to conventional applications that are more competent in protecting their personal data.