Decentralized Applications: The good, the bad, and why should enterprises care?
With the upsurge of blockchain, the emergence of dApps is already a steady trend. Now is the time for enterprises to pay more attention to what’s happening and how it affects them and their target audience.
By now, it’s safe to say that blockchain is here to stay. As it becomes more prevalent around the world, new developments are constantly being added into the mix to improve efficiency and convenience for users and organizations alike. One of these is the introduction of decentralized applications, or dApps.
A typical software application is stored on a centralized server or network. It receives data from various sources, which it processes, computes, and manipulates based on frontend requests . A dApp has its backend code on decentralized technology such as blockchain, where it receives and computes data provided by the blockchain, i.e., smart contracts. dApps aren’t controlled by a single server or entity, which means they don’t have data silos or a single point of failure.
The dilemma of dApp developers
There are currently around 4,000 dApps worldwide, ranging in category from gaming and gambling to health and insurance. While the leading categories in Ethereum dApp activity are games and exchanges, finance apps have been gradually gaining traction over the past few years. Still, growth isn’t what you’d expect. After all, dApps have been around since 2015 – so why aren’t they being developed at a faster rate?
Developers need to create applications that attract users, but there aren’t enough enterprises and consumers using blockchain-run networks to begin with, which makes it difficult to drive an app to success.
But given the constant upsurge of blockchain, edge computing and mobile computing, distribution of control is unavoidable and the emergence of dApps is already a steady trend. Therefore, now is the time for enterprises to pay more attention to what’s happening and how it affects them and their target audience.
Business dApps: The Good
Everything has pros and cons, and dApps are no exception. Let’s start with the advantage of decentralized applications:
Simple to develop - dApps use very complex protocols to achieve consensus, the greater complexity the great abstraction provided for the developer looking to implement a specified business logic.
More control - Enterprise blockchain-based applications are usually designed to connect different organizations or trading partners. If even a part of the solution is centralized, each organization must trust the entity controlling that part. Fully decentralized applications don’t have this problem, because a decentralized structure allows each party to run the app without having to trust any other party. This usually results in faster adoption of the application.
Safer data - dApps are based on a shared database that replicates stored information across all other nodes. This means that hijacking a single node doesn’t restrict the organization’s ability to access its critical data.
Open source - All dApp code is supposed to be open source, which means it’s transparent and can be viewed by anyone who wants to verify the developers’ claims on what it does.
Transparent data - While privacy laws and regulations differ from one country to the next, centralized applications still require users to ask them for their own data. Since dApps are on a public blockchain, this information can’t be hidden.
Less downtime - dApps are more robust and flexible than centralized applications since they don’t require connectivity to a single centralized server to run. This means that enterprises can ensure minimal interruptions and downtime for maximum business continuity and resilience.
Data is never lost - Once information is added to the blockchain, it’s stored permanently, which means dApps are more resistant to modifications or restrictions.
Can’t be blocked - dApps aren’t hosted on any particular IP address. Since there is less authority owning a dApp’s network, it is much more difficult for external authorities to block a dApp.
Cost reduction - dApps offer a higher transaction speed, which translates to cost reduction. Unlike centralized systems, organizations don’t need to install heavy servers and hire experts to manage and maintain their servers and data.
Can’t have the good without the bad
It’s not all roses when it comes to dApps; there are a few issues that should be addressed:
dApps infra is harder to maintain. ard to develop - Running in a complex environment, distributed between peers makes maintenance, debugging, and updates are harder, because every peer in the network needs to update their node software.
Traditional security doesn’t work - Unlike single-server apps, dApps have no point of failure – which means they’re more resistant to attacks than traditional applications. If a centralized app is attacked or taken down, the entire system stops working, whereas a dApp will only fail if every single computer in the network fails – which is near-impossible. Bringing down one server won’t be a problem. So where’s the downside? Typical security solutions won’t work in this case. It’s critical to use dApp-specific security solutions, because they operate differently and in a very distinct environment. Valid Networks’ blockchain security platform for dApps does just that - securing transactions internationally with proprietary technology for blockchain business applications.
Lacking user experience - dApps don’t function the same as centralized applications do, and they don’t always have the best user experience. For example, because dApps are blockchain-based, you would need to use a public and private key to log in, instead of a username and password that you can easily remember or type.
Slow speed - dApps can sometimes be slow to load, and payments can take a while to process. This adds lagtime to processes we have come to expect as instantaneous. This is one of the reasons enterprises often opt for the “devil they know” despite hidden fragilities such as unscrupulous data collection practices.
Blockchain technology has changed, and is still changing, the world. It brought innovation to many different industries, and enables companies to introduce new and exciting services and capabilities. dApps are just one of the byproducts, offering secure open-source software for everyday users and businesses. As with all advancements, it is inevitable that numerous practices currently in use will become obsolete, as evident by the growing number of finance-related dApps indicating more blockchain adoption in the industry. As dApps continue to grow in number and more innovations enter the playing field, it is always important to understand the good and bad of each application and technology as we adopt and adapt.