If you are just beginning to dabble in the world of Ethereum, there are some important phrases you will want to understand along the way in your journey. “dApps” is likely one that will come up fairly soon, especially if you hope to use popular blockchain for development!
Let’s take a look at the parts that make up an Ethereum dApp, so you can better understand just what you are diving into and how all these moving parts work together.
To understand an Ethereum dApp, it is ideal to first understand a little bit about Ethereum itself. Ethereum is an open-source, decentralized blockchain network. Now, that is quite the mouth-full, so it can also be helpful to understand those basic building blocks, too.
Ethereum is a space that offers smart contract functionality. All of these factors allow it to also create, store, and share dApps and support dApp development.
Let’s further breakdown the components that make up Ethereum’s existence at all.
A Decentralized Network
One of the first pillars of Ethereum, and also the dApp itself, is the use of a decentralized network. This means that there is no centralized server storing the information or “owning” the technology.
Not only is it distributed across the peer-to-peer network, it is also not overseen by any one central authority or power. There is no single entity in control of the network.
In contrast, there are networks that rely exclusively on a centralized server to exist. Such applications you are likely very familiar with, including Facebook, Twitter, or Instagram, operate on centralized servers.
These networks are owned and operated by a single entity, the company (or individual) that owns them. They are governed by rules set forth by that owner. They also can see fit to control who is on the network, how they use it, or even what is required to join the network, such as the sharing of personal information.
However, unlike centralized servers and applications, the offerings of decentralization bring a series of benefits, such as anonymity, freedom of speech, and open access that are not typically featured on a centralized application.
Instead, the decentralized applications (dApps), and their housing networks such as Ethereum, rely on this peer-to-peer sharing of the network in order to operate. This system allows for secure protection, authenticity, and a sharing of ownership, just to name a few perks.
We also noted that Ethereum is a blockchain network. But what exactly does that mean? A blockchain is a technology that is operated on the decentralized theory. It uses distributed ledger technologies to allow for the peer-to-peer sharing.
All transactions on the blockchain are recorded in “blocks,” which are linked together, you may have guessed by now, in a virtual “chain,” hence the naming. Blocks of information, which store the transactions, are made secure by a series of in-depth, complicated computations.
Again, the focus of a blockchain is also to be decentralized. It is not to be housed in any one, single, centralized server, but instead “lives” on a network accessed by all of its users. Ethereum is just such a blockchain.
Another important piece of the dApp puzzle is that of the smart contract. A smart contract is an automated program that allows a predetermined outcome to occur. These functions typically rely on an “If/Then” system.
In other words, IF x occurs, THEN y will happen. For example, you can look at the process of the smart contract in the terms of a vending machine. If you put a dollar in the machine, push the correct series of buttons, then a candy bar will come out.
Smart contracts operate without the use of human interaction. Much like the sale of the candy bar, no person was required to be involved. Instead, the user interface (in this case) was a vending machine, and the user (the candy bar buyer) performed the proper “IF” scenario for the “THEN” to occur. In other words, money and button-pushing went in, and a candy bar came out.
Who Owns a Smart Contract
Once it is locked into the blockchain technology, a smart contract is part of the platform. It lives there. It is owned by all users on the platform.
Remember, just like a dApp itself or the Ethereum blockchain, these functions all rely heavily on the theory of decentralization. In other words, no single power or entity owns nor controls the item.
In the case of smart contracts on the Ethereum blockchain, any user can access and apply the contract. Once it is live on the network, it is there for community consumption in any way that one sees fit.
The Pros of a Smart Contract
The good news is that smart contracts are able to be accessed and used by the masses. This makes the developers happy because steps typically required to “recreate the wheel” so to speak are not needed here.
In Ethereum, any smart contract can be used by any developer, and there is no need to redo work that has already been done. It becomes a “fact,” or an accepted truth so to speak in the realm of Ethereum.
The Cons of a Smart Contract
On the flip side, smart contracts are rather “set in concrete” as it were. Although when it comes to the blockchain network, there are no jackhammers that can save you from this fact.
Once a smart contract is locked into place in the blockchain, it is set. It cannot be changed. Another major feature of the blockchain network and its technologies is that very fact: the blocks in a blockchain are immutable.
While this provides for a stability that can be comfortable to many, it can also mean that errors or problems cannot be altered after the creation of a smart contract. In other words, those creating them need to really dot their Is and cross their Ts before finalizing the contract.
What is a dApp?
Now that we understand some of the building blocks that contribute heavily to the definition, it is far easier to breakdown what a dApp is. Firstly, dApp is an abbreviation. Much like anything you find on the world wide webs, the word is a shortened form of a longer phrase. The Internet is all about saving time and making life easier, right?!
dApp stands for decentralized application. Sometimes referred to also by decentralized apps, the meaning doesn’t change no matter the shortening of the phrase.
As previously discussed, an application can be centralized or decentralized. In simplest terms, an application is a function or program that is meant to perform a service or “putting something into operation” as a dictionary would more commonly describe the word.
No matter how it is owned or stored, an application is simply that, a function to be used.
A decentralized app can truly be made for an endless list of purposes. From gaming to finances, business technology to social media, there are countless ways applications are being used today, across different industries, including those that are decentralized apps.
A dApp is first and foremost something to create utility. It combines the smart contract and a user interface to allow for some action, service, or need to be performed.
Decentralized apps work through automation. Remember, a smart contract requires an “If/Then” process. If x happens, then Y can occur.
Because of this technology, there is no requirement for a human to intercede. In other words, the process is made to perform automatically.
dApps found on Ethereum are designed to be open, accessible, and transparent. As previously noted, the entire platform on which the technology exists is designed to be a peer-to-peer, sharing of authority, ownership, and experiences.
A vast majority of all dApps live on the Ethereum network. Thanks to the Ethereum network’s “Ethereum Virtual Machine,” such applications are easily developed and allow for everyone from new beginners to industry experts to create.
With no single authority, the dApps are also free for others to use. There are no single owners here. A decentralized app means that they are open for use.
Features of the Ethereum dApp
There are a few key components of an Ethereum dApp that make the function stand out. Those crucial features include:
- Decentralized platform, with no central authority and open source code
- Isolated applications in the EVM (so no bug can destroy the entire network)
- Ability to perform any action given the proper resources
- Uniformity in performance no matter the environment in which they are used
Benefits of dApps on Ethereum
Because of these unique features, the dApps present a number of benefits that many users enjoy. For example, dApps allow for:
- Privacy as no personal information is required for use
- Free speech as no central authority can control users
- Reliable behaviors as no human interaction is involved
- Protections from malware and hackers
- Immutable, indisputable data stored in a secure blockchain
For these reasons, it is clear that the decentralized apps will continue to rise in popularity for years to come.
Drawbacks of dApps on Ethereum
Every silver lining has a touch of grey, or so they say. The world of decentralized applications is no different. Some of the negatives when it comes to dApps include:
- Inability to make chances once saved
- Massive computing abilities often required to interact with the blockchain
- Network congestion due to so many users computing at once
- Costly overhead limits access for the masses and financially limits those working in Ethereum
These are hurdles the dApp industry will certainly have to address as time moves forward, in order to keep them a useful and efficient function for years to come.
The Future of Ethereum dApps
No one has a crystal ball to tell us exactly what the future will bring. While it is clear that there are many advantages and desirable features of the decentralized apps, it is just as clear that there are some serious hinderances that could hold the use of dApps back.
Depending on how these hurdles are handled, the dApp could have a very bright future ahead.
Ultimately, there is only one thing you can guarantee about the future. Things will continue to evolve and change over time. Stay informed with useful resources, and make informed decisions when you move around in the virtual world.
Thankfully, at FLOLiO we have the tools and resources to make that research simple and trusted. Stay tuned into our work to understand all of the ins and outs of this ever-changing industry.