What is DAPP?
DAPP (decentralized application) consists of a backend code running on a decentralized peer-to-peer network. DAPP can also have a user interface created by the frontend code that accesses the backend. DAPP does not require any central server to operate: interaction between users and providers is carried out directly.
DAPPs often have the following characteristics:
- They work on the blockchain;
- They have an open source code that works autonomously and no single person or group can control most tokens;
- They generate tokens to reward participating nodes;
- Users access them in exchange for tokens.
Miners are rewarded in tokens in case of a successful contribution to the ecosystem.
Unlike most applications used today, DAPP stores all data on the blockchain, and their backend code runs on the blockchain, not on the central server.
Money management applications: users can conduct transactions with each other on the blockchain network using its internal currency. Such DAPPs usually have their own blockchains, and we often call them cryptocurrencies (for example, Bitcoin).
Applications that integrate money with external events in the real world: for example, a logistics company can determine whether it has reached the port’s cargo using the location of the RFID chip and then pay for the freight. It can even be done with tools in the blockchain, without human intervention, if the buyer and the seller enter into a smart contract.
Decentralized autonomous organizations (DAO): decentralized, not having the head of the organization on the blockchain. From their very creation, they work according to programmatically defined rules that determine who their members can be, how participants can vote, what business or activity they can do, and how tokens, funds or value are exchanged. After launch, DAOs work autonomously according to their rules. Their members can be anywhere in the world.
So far, most ICOs have been conducted by DAPP startups (built on blockchain platforms). Most current DAPPs from the 2nd and 3rd categories use the Ethereum platform.