Decentralized applications

All ideas mentioned earlier come under the larger umbrella of decentralized applications. All DAOs, DACs, and DOs are basically decentralized applications that run on top of a blockchain in a peer-to-peer network. This is the latest advancement in technology with regard to decentralization. Decentralized applications or DAPPs are software programs that can run on their own blockchain, use another already existing established blockchain, or use only protocols of an existing blockchain solution. These are called Type I, Type II, and Type III DAPPs.

Requirements of a decentralized application

In order for an application to be considered a decentralized application, it must meet the following criteria. This definition was provided by David Johnston and others in their whitepaper called The General Theory of Decentralized Applications, Dapps:

1. The DAPP should be fully open source and autonomous and no single entity should be in control of a majority of its tokens. All changes to the application must be consensus-driven based on the feedback given by the community.
2. Data and records of operations of the application must be cryptographically secured and stored on a public, decentralized blockchain in order to avoid any central points of failure.
3. A cryptographic token must be used by the application in order to provide access and rewards to those who contribute value to the applications, for example, miners in bitcoin.
4. The tokens must be generated by the decentralized application according to a standard cryptographic algorithm. This generation of tokens acts as a proof of the value to contributors (for example, miners).

Operations of a DAPP

Establishment of consensus by a DAPP can be achieved using consensus algorithms such as Proof of Work and Proof of Stake. So far, only PoW has been found to be incredibly resistant to 51% attacks, as is evident from bitcoin. Furthermore, a DAPP can distribute tokens (coins) via mining, fundraising, and development.

Examples

Examples of some decentralized applications are provided here.

KYC-Chain

This application provides a facility to manage Know Your Customer (KYC) data in a secure and convenient way based on smart contracts.

OpenBazaar

This is a decentralized peer-to-peer network that allows commercial activities directly between sellers and buyers instead of relying on a central party, as opposed to conventional providers such as eBay and Amazon. It should be noted that this system is not built on top of a blockchain; instead, distributed hash tables are used in a peer-to-peer network in order to enable direct communication and data sharing between peers. It makes use of bitcoin as a payment network, however.

Lazooz

This is a decentralized equivalent of Uber. It allows peer-to-peer ride sharing and users can be incentivized by proof of movement and can earn Zooz coins.

Note

There are many other DAPPS that have been built on the Ethereum blockchain and are showcased at http://dapps.ethercasts.com/.