An Introductory Guide to Decentralized Applications (dApps)

By Irene Kimutu
18 Min Read

dApps primarily aim at eliminating fees and third parties representing technological advancements in the realm of cryptocurrency.

Decentralized applications, also known as  dApps, are software applications that run on a decentralized network of computers. This is where they don’t involve a single server. They leverage blockchain technology, which ensures transparency and immutability through distributed mechanisms. 

dApps are a crucial element of the broader blockchain ecosystem; this implies that they enable peer-to-peer interactions without the need for intermediaries.

Overview of Decentralized Applications(dApps)

dApps usually operate independently, free from the influence of a central authority. Importantly, they are designed to serve various purposes, including social media, gaming, and financial applications.

They also operate on a public and open-source blockchain network, existing in a decentralized environment. This makes them entirely immune to control. This fact implies that these apps are not subject to the control of any individual, party, or organization.

The significance of decentralization in the cryptocurrency and Blockchain industries is widely acknowledged. From a foundational perspective, it entails an equitable distribution of power. By embracing community-based decision-making it guarantees that no individual holds absolute authority.

4 Distinguishing Features of dApps: Unique Traits Setting Them Apart

dApps possess four distinctive characteristics that differentiate them from other applications. These features are:

a.Decentralization: They operate on a decentralized network, which means they rely on blockchain technology. This eliminates the need for a central authority to control their functioning.

b.Transparency: All transactions and data on dApps are recorded on a public blockchain. This provides a transparent and auditable record of activities.

c.Open Source: dApps are built using open-source code. This means they allow anyone to access, review, and modify the application’s code.

d.Consensus Mechanism: dApps use a consensus mechanism to validate transactions and secure the network. This ensures the integrity and immutability of the data on the blockchain.

Difference between a Centralized and Decentralized app

Centralized App

1. Control and Ownership: Centralized apps are owned by a single entity or organization. This means they have full authority over the app’s operations, data, and user interactions.

2. Data Storage: Data in centralized apps is typically stored on centralized servers and managed by the app’s owner. This enables users to trust the entity with the security and privacy of their information.

3. Single Point of Failure: Centralized apps are vulnerable to single points of failure. This implies that if the central server goes down or faces technical issues, the entire app may become inaccessible.

4. Intermediaries: Centralized apps often involve intermediaries, such as payment processors or data aggregators. This leads to additional fees and potential privacy concerns.

Decentralized App(dApp)

1. Ownership and Governance: dApps are not owned or controlled by a single entity. They operate on a decentralized network. Their decisions are often made through consensus among network participants.

2. Data Storage: dApps store data on a distributed blockchain; this helps ensure transparency, immutability, and data ownership for users. Data is not under the control of a central authority, hence reducing privacy concerns.

3. Resilience and Availability: dApps are more resilient to failures as they don’t rely on a single central server. The decentralized nature of the network ensures continuous availability and uptime.

4. No Intermediaries: dApps eliminate the need for intermediaries; this helps in reducing transaction costs and enhancing user control over their digital assets and data.

For more understanding of difference between these two entities, Decentralized and Centralized exchanges, read this article

Utilizations of Decentralized Applications(dApps)

dApps have been created with the goal of decentralizing various functions and applications. These functions include:

1. Finance and payments- dApps has revolutionized the financial sector by enabling decentralized lending, borrowing and remittance services. These platforms facilitate borderless transactions and give users more control over their funds.

2. Supply chain management- They are used to track the movements of goods through a supply chain. They do this by recording every step of a product’s journey on a blockchain. This ensures transparency and accountability. It also helps in verifying the authenticity and origin of goods, hence reducing the risk of counterfeiting.

3. Predictive markets– By predictive it means they can be used to create decentralized platforms for predictive markets. This allows users to make predictions on a variety of topics and potentially earn rewards for accurate predictions.

4. Social media and content– They are emerging as alternatives to traditional social media platforms. Thus enabling content creators to be fairly rewarded and giving users control over their data. They allow users to interact and share content without the need for a central authority.

5. Education-  dApps are used to create decentralized learning platforms. This is by allowing students and teachers to interact and collaborate directly without the need for intermediaries.

6. Healthcare– This is where they are used to store and track healthcare records. They also facilitate the communication and collaboration of healthcare professionals.

7. Real estate– dApps can facilitate the buying and selling of real estate directly between buyer and seller. They can be used in the tracking of property ownership and related documentation such as deeds.

8. Gaming– They have found significant applications in the gaming industry. This is where they are offering players actual ownership of in-game assets and provably fair gameplay. Blockchain-based games use non-fungible tokens(NFTs) to represent unique in-game items.

We recommend reading this article to learn more about NFTs and the importance of owning one.

Diverse dApps Unleashing Decentralization Across Industries

Decentralized applications are among the fastest-growing sectors in the blockchain space. Here are examples of the most popular and quickly evolving Dapps today.

1. Uniswap

This is a Decentralized exchange(DEX) built on the Ethereum blockchain. It allows users to trade various cryptocurrencies without the need for intermediaries. It is also a protocol that facilitates peer-to-peer market-making and swapping of ERC-20 tokens on the Ethereum blockchain.

For a better understanding of security and trust provided by DEXes, we recommend you read this article.

UNI token owners and delegates from around the world work together to operate the Uniswap Protocol.

Its key features as a dApp include:

(i) Decentralized Exchange: Uniswap allows users to trade cryptocurrencies directly from their Ethereum wallets. It

(ii)Automated Market Maker(AMM) Model: Uniswap utilizes an AMM model. This is where liquidity is provided by users who contribute their funds to liquidity pools. These pools are smart contracts that hold reserves of two different cryptocurrencies, and users can trade between these pairs.

(iii)Liquidity Providers and Earning Rewards: Users who provide liquidity to Uniswap’s liquidity pools receive rewards in the form of trading fees. The fees are distributed proportionally to the liquidity providers based on their share of the pool.

(iv)No Order Book: Unlike traditional centralized exchanges that rely on order books, Uniswap uses a constant product formula. This helps in determining the exchange rate between the two assets in a liquidity pool.

(v)Decentralized Governance: Uniswap’s governance is community-driven. Meaning it allows token holders to propose and vote on changes to the protocol. UNI, the native governance token, gives holders voting power in the decision-making process.

Uniswap has played a crucial role in popularizing the concept of decentralized exchanges and contributes significantly to the growth of decentralized finance(DeFi) applications. It exemplifies the power of dApps in enabling peer-to-peer transactions. This provides transparency and reduces the reliance on centralized intermediaries.

2. MakerDAO

Maker DAO is a prominent application(dApp) that operates on the Ethereum blockchain. It exemplifies the innovative potential of blockchain technology in the decentralized finance(DEFi) sector.

For better understanding of DEFi projects, read this article by droom droom

It is also a decentralized lending platform that enables users to borrow and generate stablecoins, known as DAI. It achieves all this by locking up collateral in the form of other cryptocurrencies, primarily Ether(ETH).

Its key components include: 

a. DAI Stablecoin

b. Collateralized Debt Positions (CDPs)

c. Collateral Auctions

d.  Governance and MKR Token

3. Golem

This is a decentralized supercomputer built on Ethereum. It allows users to rent out their computing power or use others’ computational resources for tasks like rendering and complex simulations

The main goal of Golem is to combine the power of PCs and data centers. This creates a rentable supercomputer that anyone can use anywhere in the world. Rather than relying on a central server farm, the initiative distributes the computational load among “Providers.”

Golem’s network is composed of two main user roles: Requesters and providers. Requesters are users who require extra computational power to perform resource-intensive tasks. These tasks include rendering CGI, scientific simulations, and data analysis. They create tasks and submit them to the Golem network.

For the providers, they are users who have spare computing resources, such as CPU or GPU power, that are willing to share with the network. They participate by contributing their idle resources to complete the tasks requested by the requestors.


This is a blockchain-based virtual collectible game built on the Ethereum blockchain. It showcases the potential of dApps to revolutionize the gaming and asset ownership landscape.

It is also one of the pioneering and highly popular decentralized applications(dApps). It gained it significant attention during the 2017-2018 cryptocurrency and blockchain boom. 

CryptoKitties allows users to collect, breed, and trade unique virtual cats represented as non-fungible tokens(NFTs). Each CryptoKitty is an individual and cannot be replicated, making them truly one-of-a-kind digital assets. The game uses Ethereum’s ERC-721 standard. This enables the creation of non-fungible tokens, making each CryptoKitty distinguishable from one another.

5. Augur

This is a prime example of a decentralized application(dApp) that operates on the Ethereum blockchain. It is also a decentralized market platform that enables users to create and participate in prediction markets for real-world events.

Augur leverages the power of blockchain technology to create a transparent and censorship-resistant prediction marketplace. This demonstrates the potential of dApps to disrupt traditional prediction and betting industries.

It also allows users to create and trade prediction shares for real-world events, such as election outcomes and sports results. These prediction markets are represented as smart contracts on the Ethereum blockchain. They ensure that the outcome resolution is decentralized and publicly verifiable.

Benefits of  Decentralized Applications(dApps)

1. Security: Blockchain’s cryptographic principles and consensus mechanisms enhance the security of dApps. This makes them less vulnerable to hacking and unauthorized access. Let say, for instance, if a single node in a decentralized network is still working, the network can stay available, even though performance can be extremely downgraded. This is due to the absence of a centralized network. Thus, a hacker will not be able to attack a good network of nodes to take down a dApp.

To understand more about security in Blockchain and the threats faced, read this article

2. Decentralization: dApps run on a distributed network, reducing the reliance on a single point of failure. This makes them more resistant to censorship and ensures continuous availability.

3. Transparency and Immutability: All transactions and data on dApps are recorded on the blockchain. This provides a transparent and tamper-proof record of activities. The blockchain consensus algorithms ensure that data stored in the blockchain is resistant to change. That’s why this stored data is secure and immutable.

4. Global Accessibility: This is enhanced by the Ethereum blockchain. It offers adequate flexibility to quickly develop decentralized apps for different industries. dApps can be accessed by anyone with an internet connection, regardless of their geographical location, thus fostering financial inclusion.

5. Enhanced User Control: dApps often give users full ownership and control over their data and digital assets. This promotes individual sovereignty needs. Users do not need to submit their personal information to decentralized apps to use an app-specific functionality.

Drawbacks of Decentralized Applications(dApps)

1. Scalability– In comparison to centralized networks, decentralized networks are harder to scale. Many existing blockchain networks have limited scalability, leading to slower transaction processing times and higher fees during peak usage.

To know more about scalability in blockchain and how to solve it, read this guide by droom droom

2. Regulatory  Challenges– The decentralized nature of dApps can pose regulatory challenges. This is because they might not fit into existing legal frameworks.

3. User Experience– Decentralized apps do not function in the same manner as centralized apps. That is why it can be more challenging for developers to develop a user-friendly end-user experience. Instead of a username and password, users need a private and public key to log in.

4. Energy Consumption– Some blockchain networks, particularly proof-of-work-based ones, consume significant amounts of energy. This raises concerns about their environmental impact.

5. Maintenance– On the side of maintenance, It isn’t easy to debug, update and maintain decentralized apps. This is because all fixes need the consensus of every peer in the blockchain-based network.

6. Smart Contract Vulnerabilities– Smart contracts, which power many dApps, can have vulnerabilities. These bugs could lead to security breaches or financial losses.


Despite all the challenges, dApps are seen to continue growing in popularity due to the rise of cryptocurrencies. They are also continuing to evolve and find innovative use cases across various industries. This is contributing to the ongoing development and adoption of blockchain technology.

As we see the technology maturing and scalability improves, dApps are likely to play an increasingly prominent role in the digital landscape. They are standing at the forefront of the blockchain revolution. This is by shaping a future of transparent,user-centric, and inclusive digital experiences. As they disrupt industries and democratize access, let’s navigate the challenges and embrace the opportunities together.