Decentralized applications (dApps) are the next step in blockchain technology. They are web applications that allow developers to create a full-featured app on the blockchain instead of just leveraging the functionality of smart contracts or tokens. In this post, we’ll explore how to build a dApp on the Ethereum network and what it means for the future of blockchain.
Today, an estimated 240 million people around the world use mobile apps, and that number is sure to continue growing every day. However, while using these apps, you might have noticed that you rely on central authorities all the time — almost every app you use has its own database which helps with authentication and access control. All of your personal information is stored on the central database of these apps and gets shared with a central authority based on the terms of services. What if you could make your own application that follows those same rules but allows users to interact directly? That’s what decentralized applications let you do.
But how easy would it be for someone to make their own dApp? Well, assuming you already know how to write smart contracts and are comfortable with the Solidity programming language, which is executed via the Ethereum Virtual Machine (EVM), it should take about 2 hours to complete this task. Of course, if you don’t know any of the above languages, then the process will take a bit longer.
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Decentralized apps are software that people use to interact with a blockchain and have the ability to perform functions that a cryptocurrency like bitcoin can’t, as well as being able to conduct business exclusively using the currency of a specific network.
Dapps are important because they have the power to disrupt a number of industries. We’ve already seen that with Ethereum, which has enabled the creation of decentralized applications. These blockchain projects can be developed and released on smart contracts, potentially creating self-validating contracts and autonomous systems that operate directly on the blockchain.
DApps are a growing movement of applications that use Ethereum to disrupt business models or invent new ones. On the Ethereum blockchain, users can transact with each other without a trusted central authority. Transaction records are immutable, and they are securely distributed across the network, giving users full ownership and visibility into transaction data. Users send and receive transactions using ether, the native cryptocurrency of Ethereum. Users must sign a transaction and send ether to process transactions on the network.
The Ethereum blockchain is a decentralized platform that can execute code securely with the help of a peer-to-peer network. By using smart contracts and cryptographic methods, it enables developers to build programs without any downtime, censorship, fraud, or third-party interference.
Smart contracts give you the opportunity to transact with other parties without a need for a trusted third party. Users can send Ethereum tokens (Ether) to each other, and transaction data is distributed across the network, which means that no single user controls or owns the system. All transaction records are immutable, and you can verify their security and ensure that you have full ownership.
Benefits of an Ethereum dApp
Two of the most important principles to remember when developing with Solidity are availability and gas. DApps built on the Ethereum platform can connect users to the blockchain using any wallet software like MetaMask and others, which means the apps are available to anyone with an internet connection. The Ethereum blockchain is run by miners who process transactions and verify new blocks, running every interaction through a smart contract. Transactions also cost gas, or transaction fees, which must be paid in ether. Most DApps use the basic smart contract set that Ethereum provides, but eventually, developers might want to move from the basic version to a more sophisticated one that can perform more complicated work.
The large number of projects that are deployed on the Ethereum platform means that more developers will be driven to develop their own projects running on Ethereum’s blockchain, which further reinforces the platform as the go-to home for Ethereum DApp development.
In the future, the Ethereum 2.0 protocol, which is still being developed, will be more scalable than the current Ethereum blockchain. This will allow developers to build apps that require higher transaction throughput. They can do this by moving from the current Ethereum network to the future Ethereum blockchain.
Difference Between a dApp and a Traditional App
Before you start looking into decentralization, you need to ask yourself a few questions: How far do you want to expand your app? How much control do you want to retain?
Decentralized apps are still new, however, if your business is built around emphasizing censorship-free content and the idea of promoting freedom of information, then it should be one of your main concerns.
Traditional apps or centralized apps are operated and owned by a single company. They use the server provided by the app developer, or a cloud service provider, to run the app. The server is currently the only way an app can work properly.
If the centralized server crashes, there won’t be any updates for all the user devices until it’s fixed.
Examples of centralized apps include:
Decentralized apps, on the other hand, operate on peer-to-peer networks called blockchains. There’s no central server. Their functioning depends on the consensus among blockchain participants.
Apps and dApps both share a lot of similarities. The only giveaway of an app is that it often has some kind of crypto token built-in, but if a regular app depends on private servers to do this, it can be called a dApp. Advanced users can always interact with the back-end of a dApp without using a graphical user interface.
There are two common mechanisms by which dApps can establish consensus:
With POW “decisions about changes in a Dapp are made based on the amount of work that each stakeholder contributes to the operation of the Dapp.” Mining is the mechanism for establishing consensus in regards to POW.
With POS, “decisions about changes in the Dapp are made based on the percent ownership that various stakeholders have over the application.” This would mean that a stakeholder owning 10% of the token carries 10% of the weight.
Both mechanisms can run parallel in order to prevent 51% of attacks. Peercoin is an example of running both mechanisms.
When distributing tokens, there are three common mechanisms:
Where DApp developers distribute tokens to those who contribute the most work toward the operation of a dApp.
Occurs when tokens are distributed to those who fund the initial development of the dApp.
Tokens are generated using a predefined mechanism and are only available for the development of the dApp.
DApp Market Trends
The web is becoming more and more decentralized, and it makes sense for expert developers to create decentralized apps. If you plan to create a P2P app, it helps to know the trends that are shaping this industry.
Freed from the shackles of big tech companies, peer-to-peer apps give users back control over their data. These apps use blockchain technology, which enables users to retain full ownership of their digital assets.
Current DApp Protocols
The thing that makes blockchain protocols and dApps stand out is the new kinds of shared trust mechanisms they have. The secure, immune nature of the technology makes it work even better for dApps.
Depending on the problem you’re trying to solve, you’re going to need different tools. For example, if you’re using building software like Revit, then SketchUp might be a more suitable tool for you. If you’re making a game like Minecraft, then Unity is probably a better choice.
And just like there are good and bad building software depending on what type of project you’re working on, there are also some good and bad blockchain technologies that are better suited for certain applications than others.
Decentralized Apps Used Currently
DappRadar lists over 7,500 dApps across 25 different blockchains. Many of these are non-financial, and we see a lot of games and DeFi (decentralized finance) apps. That’s because blockchain-based applications live and breathe transactions: that’s their core function. And since blockchain is a technical solution, most apps on the platform are non-financial, like games and DeFi services. Decentralized applications are perfect for financial apps because they are great at handling sensitive information.
Other notable categories of decentralized software include:
Most dApps live on the Ethereum blockchain – the first blockchain network to introduce smart contracts, making dApps possible. Other chains with dApps include EOS, Binance Smart Chain, Tron, and Neo.
Pros and Cons of DApps
A lot of things are changing in the mobile computing industry. DApps and blockchain are becoming popular, and it’s important for companies to pay attention to how this affects their products and audience. Why are dApps necessary when there’s an abundance of traditional apps to utilize? What are some advantages of switching and what are some challenges we might face?
Benefits of Decentralized Applications
No Central Authority
With blockchain, there isn’t an intermediary that handles payments or stores sensitive information. Instead of banks or credit card companies, blockchain relies on public and distributed ledgers to verify transactions, making the process more transparent and efficient. Plus, the technology is so advanced it can’t be hacked — at least not in theory. The low cost and security are big factors driving widespread adoption of the technology in industries like financial services, logistics, and manufacturing.
Multiple Front Ends
The power of a user-facing interface with an open-source, decentralized app can have a huge impact on the blockchain industry — whether you’re working to create your own chain or looking for options, you’ll find plenty of existing software that’s ready to be used. With access to existing code, you’ll be able to build an efficient and secure blockchain solution without having to invest a significant amount of time or resources into building from scratch.
You can create smart contracts that work 24 hours a day, 7 days a week, without the need for any in-house personnel to keep them running. When you build a smart contract, you are building an automated set of instructions that link your blockchain technology with the outside world. The code is transparent and available for anyone to review on the blockchain. And it will always function as designed.
Existing in the Decentralized Economy
Users of decentralized applications can find a number of benefits — they can purchase, sell, and trade products, services, and products on the blockchain. And because their data is stored on the blockchain and not in centralized servers, users concerned about their privacy will be happy to know that they won’t have to sacrifice it.
Security and Data Integrity
The major appeal of the blockchain is its security. With no central point of failure, it’s next to impossible to hack a chain and take over a decentralized application. This means developers can create more complex applications that leverage trustless nodes across the network, without having to worry about security breaches.
Each transaction is submitted to a public blockchain where it can be seen and distributed. However, the sender and receiver for each transaction are completely anonymous — the transactions are linked only by an ID number on the blockchain.
Downside to DApps
Blockchains are a distributed databases, meaning that no single computer stores the information. Each node on the network stores and verifies data, making alterations extremely difficult. While this data is entirely public, privacy and anonymity are maintained via key encryption, eliminating concerns about other users’ personal information being compromised.
DApps account for blockchain specifics, like the inability to change a deployed solution, and are therefore more challenging to manage. Traditional mobile apps get updates on average within two weeks; with a decentralized application, you have to wait for your platform’s users to download the new version from the particular app store before you can push out new code.
The blockchain itself has an impact on DApp scalability. Certain features and consensus algorithms can lead to slower transactions. For example, Bitcoin blocks can only be added every ten minutes, which is slow compared to the more transaction-friendly Ethereum blockchain, which can reportedly handle up to 50 tps (transaction per second).
While all dApps are created to support decentralized technology and promote innovative, peer-to-peer models, most users are intimidated by their interfaces. It’s an unfortunate truth that many of these designs could be made more user-friendly with even basic UX/UI design resources and expertise.
That said, one of the biggest benefits of using dApps is ignoring centralized platforms entirely.
Examples of Decentralized Apps
UniSwap is one of the leading decentralized exchanges. This dApp allows for seamless exchange of ERC20 tokens on Ethereum.
Rarenote provides personalized information on medicines under development and clinical trials for rare disease patients.
OpenSea is the largest peer-to-peer marketplace for NFTs, including gaming items, digital art, and other blockchain-based assets.
Decentralized Application Features
DApps are essentially blockchain-based apps designed to solve most of the issues that are plaguing the current world of apps. They share many similarities with regular apps in terms of functions, features, and even design. Here are some essential traits that every dApp must have to function at an optimal level.
When using a decentralized app, your customers will need to register a crypto wallet in order to get any rewards. In the future, even regular purchases will require users to be registered on a wallet and introduce a credit card or any other payment method.
Every decentralized app has a primary token that needs to be used for all transactions in the app’s background. This token is what powers the app, and users should be sure to keep some tokens at the ready when using any dApps to ensure smooth operation.
All apps, both regular apps, and dApps have to perform specific actions. The only difference is that decentralized ones require transactions to function.
Building dApps will essentially be based on:
- The blockchain you target
- Front ends you envision (mobile/web)
- Features your dApp offers
How to Build Decentralized Applications
During development, you may have to do web or mobile interfacing. You need to work on a smart contract and front ends, which are traditional web and mobile applications. You may also have to develop a back-end system, which is an aggregator of analytics and allows you to manage some aspects of the dApp.
Put simply, it’s a web application connected to the smart contract via oracles and APIs; and below are the steps to creating dApps.
STEP 1: BUILD A SMART CONTRACT
What is a smart contract, and how is it used in a dApp? The core logic of a dApp is often held in a smart contract that runs on a decentralized network. The logic could be as simple as the transfer of tokens to an owner or as complex as computing data in a cohesive process lasting days. Regardless of the specific use case, all the logic should reside in smart contracts.
How do you pick which blockchain the smart contracts will be living on? In my experience, the overwhelming majority of decentralized applications and proofs-of-concept are built on the Ethereum network, thanks in part to its popularity and user base. However, many other blockchains also have smart contracts. If you don’t know where to start, I recommend Ethereum for your MVP and figuring out which blockchains make sense for your use case throughout your product’s life cycle.
STEP 2: BUILD FRONT ENDS
Of course, you can’t make a decentralized app without starting by designing traditional, centralized user-facing mobile and/or web apps. Traditional meaning that they shouldn’t look drastically different from other apps we use every day.
Since user actions trigger some smart contract functions on a blockchain instead of connecting with a central server, the only immediate effect on the UI is that it takes some time for transactions to be executed.
To create a captivating user experience, plan on starting with a prototype: a low-fidelity version, a high-fidelity version, and after getting user feedback, refining the UI/UX based on what works best.
Take into account that calling a smart contract function from a user-facing UI takes some time as transactions are not executed immediately on a blockchain. It’s a good idea to have some sort of animation built-in on the front end to show users their action is still in progress until it gets verified on the chain.
Another great idea is to simplify onboarding for users with existing wallets by integrating with WalletConnect and similar services that make it easy for users to connect their wallets.
STEP 3: CREATE A CENTRALIZED BACK END
If you need massive data storage or plan on running a lot of reports, you may want to consider building an admin portal that connects to your smart contracts and front-end applications. This will allow your customers to use additional features, like controlling their dApp, which is out of the scope of on-chain transactions.
STEP 4: TEST
For each new app release — major or minor — plan for at least one week of user testing (both functional and usability) to make sure your product matches the expectations of your target audience(s). You will want a test network with real users who are likely to pay in crypto or fiat currency at checkout or who will be willing to purchase ads in fiat currencies on your platform and finish their purchase with the app.
Make sure they have an existing crypto wallet before testing and that they have enough ETH or that you have enough ETH or US dollars available to let them purchase ads if you are building an ad network.
Testing smart contracts are unique in that you use a testnet to verify its functionality. A testnet is a little different from the mainnet — in the mainnet, once you test and deploy smart contracts, you can’t modify them. If a bug makes it to the mainnet, it will remain there forever.
STEP 5: DEPLOY AND MAINTAIN
The final step: deploying your dApp. This involves uploading apps to the App Store and Google Play, switching your back-end portal to a live production environment if you have one, and adding a single smart contract to the blockchain. Services like Infura will help you lessen the DevOps efforts required for deploying a decentralized app.
As for maintenance, it’s an ongoing process. You’ll still need to update things on the front end regardless of whether your smart contract is affected by changes.
Developmental Costs of Decentralized Applications
The cost of developing dApps ranges from $50,000 to $200,000 depending on the complexity of the solution you need. The average price for a large-scale, complex solution is about $150,000 and takes about nine months to complete. Defying decentralization means that every part of your product needs to work as expected despite any changes in the environment.
Factors to Consider
The cost to develop blockchain apps differs depending on which enterprise blockchain you use and which features your app needs. The cost also varies widely from one project to another, as the time it takes to build an app depends largely on the business context and use cases you set out for the app.
When you look into the mobile app development industry and how the average cost per mobile app is planned, you’ll find it varying between three sets — large companies, medium-sized blockchain agencies like Appinventiv, and small agencies.
Small-cap blockchain agencies generally charge a lot less than the medium and large-size companies, as they’re in desperate need to build their portfolio. Large brands generally prefer mid-sized blockchain app development agencies because they have the resources to handle the project and don’t charge a price that will burn a hole in their budget.
Now the cost difference that comes between the three Blockchain App Development Company sizes, looks something like this –
Apps Developed by large app development companies, with a team size of cost 3000+ experts – Cost $4,50,000 to $15,00,000
Apps Developed by Mid Cap app development companies, like Appinventiv, with a team size of 500-1000 experts-cost $25,000 – $2,00,000.
Apps Developed by freelance or small-shop companies, with a team size of 10 to 50 experts – cost $2,000 to $ 25,000.
The industry in which your blockchain project will be used impacts the development cost greatly. There are many factors that vary from one industry to another — complexity of the dApp, number of stakeholders who interact with it at any given time, and industry compliance requirements, among others.
And once you’re developed the functionality of your app you should test it out with users. To do that they need to be incentivized by giving them free tokens. In most cases, ICOs play a role in distributing tokens or sets of tokens to users as a reward for their feedback on the platform or dApp.
Healthcare: $55k – 100k+
On-demand: $40k – 80k
Social Media: $45k – 100k+
Public Sector: $70k – 100k+
Finance Sector: $50k – 100k+
Complexity of the Blockchain App
Before you invest in blockchain application development, it’s a good idea to reflect on the goals of your company and the product you’re about to build. What problem will your app fix for your end-users? How will it be better than existing solutions? Take your time to determine the type of app you should invest in.
For a Smart Contract based application: Objects: Smart Contract and Consensus Mechanism. Smart Contract development is the most crucial part. The primary purpose of Smart Contracts is to store business logic rules and logic sequences, which are the output of the consensus mechanism.
Intent and Agent-based application: Objects: intelligent entities (IE), intent, and agent mapping table. Intelligent entities live in the digital world but are autonomous which means they do not belong to any person or organization but exist alone without any human interference; they have the ability to move from one place to another and interact with each other through a program that helps in making decisions on their day-to-day tasks such as how they can complete their tasks efficiently and effectively while interacting with humans through Agents. The agent mapping table identifies IEs who are interested in moving around, getting information, etc.
While writing a description document for an app, you simply just need to include details about the features of the application you want to implement and also describe briefly how all these features can be achieved by using blockchain technology.
Will DApps Change The Trajectory of App Usage?
Decentralized applications aren’t going to fully replace centralized ones, but they will continue to play a larger role in day-to-day affairs. In just a few short years, we’ve already seen a lot of advancements made to Blockchain technology and its growing role in many of our personal and business transactions. More importantly, these technologies have taken automation and data security to the next level.
One thing we can expect in the near future is a far greater number of new decentralized apps. The growing number of Dapp releases will lead to broader adoption of blockchain technology in various sectors.
We can also expect improvements in interface design and structure on these applications, which will lead to a better user experience in the long run. Dapps still have a lot of shortcomings when compared to regular apps, but expansive technology should fix that in the very near future.
DApps may be commonplace in the future and are expected to bring about a more efficient environment for cryptocurrency transactions. Now is a good time to dive in, as investors and everyday internet users are already running with this technology. While there may be some volatility in the market, this technology is sound and has a ton of potential. It’s only a matter of time until it becomes common.