Dapps stands for decentralised applications or decentralised apps. They are applications that run on a peer-to-peer network of computers instead of a centralised system with a central point of failure. This means that applications can run on their own, and are not owned by a group or individual. Blockchain is the underlying technology that enables dapps. They are used to enable embeddable records like smart contracts and have the following characteristics:
- They are open-source applications
- They are decentralised
- They have digital assets like tokens to stay afloat
- They have a built-in consensus mechanism and allows the generation of tokens
How does a dapp function?
Because it is an open-source application, anyone is able to see and contribute to the code. This makes it truly decentralised. This secures the process for scalability of a product development in both quality and quantity terms. The use of blockchain technology makes the app decentralised because it serves as a permanent ledger of records and transactions which can be referred to by anyone, at any time. Finally, to add records to these ledgers, tokens are used which are mined or pre-mined by using protocols.
Currently, the most popular protocols that are used include proof-of-work and proof-of-stake.