Decentralized Applications : Crypto Academy Season 4 Beginners'Course - Homework Post For Task 8 by @giftye
QUESTION 1
WHAT ARE DAPPS? EXPLAIN THE WORKING SYSTEM OF DAPPS? WHAT ARE THE DIFFERENCES BETWEEN DAPPS AND OTHER APPLICATIONS? EXPLAIN THE ADVANTAGES AND DISADVANTAGES OF DAPPS? HOW CAN DAPPS DEVELOPERS PROMOTE THEIR APPS? WHAT SHOULD WE PAY ATTENTION TO WHEN USING DAPPS? HOW DO WE FIND THE INFORMATION OF A DAPP THAT WE WANT TO KNOW? PROVIDE THE STEPS.
WHAT ARE DECENTRALIZED APPLICATIONS (DAPPS)
Decentralized applications (dApps) are digital programs or applications that are found and operates on a P2P network of computers or on a blockchain and not on a single computer,which makes it free from a single authority control.
For example,a web app like Uber operates on a computer system that is owned and controlled by an organized body,giving them full operational power over the app and what happens there. There may be large number of users on the platform,but their operations and transactions are controlled by a single organization.
DApps can run on both blockchain network and on a P2P network. For instance, Popcorn Time and bitTorrent run on computers that operates on a P2P network,this is where users consume or send contents,or do both simultaneously. But in the case of cryptocurrencies, DApps operates on a blockchain network,which is decentralized and public, making it free from a single authority interference and control.
For example,if Twitter which is on a centralized network is created as a dApp and placed on a blockchain,the messages posted on the platform can not be deleted or manipulated by anyone external.
EXPLAIN THE WORKING SYSTEM OF DAPPS?
CONSENSUS MECHANISM
DApps operate with two mechanisms in order to attain consensus,these are proof-of-work (PoW) and proof-of-stake (PoS).
- THE PROOF-OF-WORK
This is used as a consensus mechanism in blockchain and it's distribution of reward ,but this is achieved by the amount of work contributed by each user to the network. Bitcoin operates on this form of consensus mechanism,and the means by which users are rewarded is known as mining.
- THE PROOF-OF-STAKE
This mechanism allows stakeholders to make decisions on the dApp strictly by the weight of their stake on the network and their percentage ownership of the application. For instance,if a 50% tokens that has been distributed by the app is being held by a stakeholder of that Decentralized application,then the stakeholder carries a 50% weight.
Any app can actually use these two mechanisms at once. The combination enables the dApp to consume less energy,which is one of the disadvantages of using only proof-of-work,and it also enables the app gain more resistance to 51% attack.
TOKEN CIRCULATION MECHANISMS
In order to issue and circulate their indigenous tokens in the market, DApps adopt three mechanisms: mining , fundraising and development.
- MINING MECHANISM
This has already been discussed above ,it works on the PoW principle,where miners are rewarded for solving complex mathematical problems by the use of computational power for transaction verification,like in bitcoin.
- FUNDRAISING MECHANISM
This is basically a method if raising funds for the initial app development. The initial coin offering process(ICO) helps in carrying this method out. Prospective investors are presented with a white paper (what contains the idea for the app),website ,and a concept of proof,and if it's convincing then contributions can be made to raise funds for the app. In this mechanism ,tokens are usually distributed to those who contributed to the initial development of the application.
- DEVELOPMENT MECHANISM
Here tokens are generated by use of predefined mechanisms . These tokens are made readily available for the sole purpose of developing the dApp.
WHAT ARE THE DIFFERENCES BETWEEN DAPPS AND OTHER APPLICATIONS?
- DApps have the ability to store value. They can store crypto assets and later transfer to users once the contract demands have been completed and verified.
Where as, traditional apps are dependent on trusted third party service for safe financial transactions. The need for a third party service has been eliminated by dApp based on it's ability of directly storing value in itself.
DApps can easily interact with each other,to a large extent,all the dApps in a blockchain are said to be inter-compatible, and their possibility of synergy is allot higher than that of traditional apps.
Conventional apps are said to be more secure than DApps, following the incident of the DAO scam(a very expensive DApps recorded in history) in 2016,this dApp was scammed of $50 million in Ether assets. Security protocols for DApps are still in need of refinement.
Applications are quite faster in transactions than DApps,which can be frustrating. For instance,about only 15 transactions can be processed per second by the Ethereum network.
Data entered in an application can be removed by a central control,but that of a dApp is irremovable,unless there's an agreement between thousands of participants to remove it.
A small fee is paid by users anytime they make use of a dApp,the more complicated the apps is ,the higher the fee to be paid by users.
EXPLAIN THE ADVANTAGES AND DISADVANTAGES OF DAPPS?
| ADVANTAGES | DISADVANTAGES |
|---|---|
| There's no control from any single entity. It's close to impossible for an individual or even the government to withhold access or control the dApp. | Because they run on smart contracts and an open-source network ,they are susceptible to hacking. |
| Because DApps exist on a P2P network of computers,they don't rely on one hosting server,which keeps them from experiencing restrictions and downtimes. | Many DApps are not easy to access because of the complexities of their ecosystem,too many new concepts to be familiar with. |
| DApps are prone to faster and more secure development of it's ecosystem because it is open sourced. | They are bare in content and less usable because they struggle with lack of users. |
| They don't rely on third party services to carry out financial transactions,as it can be done directly between users in cryptocurrency. | When there's an issue in DApps, fixing it is difficult because it would require an update of all the copies in the network by every pair that exists in the network. This is really not an easy task. |
| The need for subscription or registration has been done away with by the use of public and private keys. | Since dApps don't have a central authority that controls it's affairs, there's no one responsible for it's KYC verification (unlike in centralized apps) . This makes building DApps quite challenging. |
HOW CAN DAPPS DEVELOPERS PROMOTE THEIR APPS?
DApp market has recorded some impressive results in the past few years,and in the Q3 of 2018 it succeeded in gaining popularity. The Ethereum based dApps started hitting the market hard,then that of EOS followed it's footsteps,joined by steem and Tron.
Now,the dApp industry didn't get to where it is now by accident or luck,their achievements and popularity were faced with so many challenges and hardships which brought about so many setbacks that hindered it's ultimate app. These hardships were overcome by the employment of various marketing techniques and strategies.
Many decentralized platforms are looking for experienced and reliable digital marketing agencies that can conduct professional business development with speed to partner with,and to a large extent they rely on this partnership. It's one thing to develop and outstanding app,it's another to bring it to the awareness of people and to capture their interest.
- Firstly,to effectively promote your app,you must have a defined goal and target for that app,as with every other business.
- Another thing you must consider is if you have the means to achieve your targeted goals on your own.
- Your goals must be as concrete and unwavering as possible, because if you start off by being at the top in dApp radar,your chance of success will be less.
- The dApp industry is on a fast lane,if you don't follow up with bravery, audacity,time management and with a strong team power you will be left behind.
STEPS ON HOW TO PROMOTE AND ANNOUNCE YOUR APP TO THE WORLD
- There are websites that review DApps,get listed on those websites.
- Begin with an influencer marketing that is very powerful,and try to be honest about it.
- Create a marketing plan on social media that is decentralized.
- Attend conferences on investment and developers related.
- Get involved in a media campaign,but according to what you can afford.
- Get connected to those ahead of you and try collaborating, learn and partner with bigger projects.
WHAT SHOULD WE PAY ATTENTION TO WHEN USING DAPPS?
Investing in cryptocurrency is one of the best movies an investor and take,but as with other forms of businesses,you don't just jump into every investment opportunity that comes your way without first having to know the risks involved.
Their are DApps that are called high-risk dApps, examples include - forsage or etherchain,they usually have the structure of a pyramid or more like a Ponzi scheme.
WARNING SIGNS THAT EXPOSES HIGH RISK DAPPS
- A promise of getting so much returns for almost doing nothing or with little risk.
- Claim to be transparent and distributed,while they are really not.
- An unshakable and consistent flow of returns that is independent of the condition of the market.
- Claim to be collaborating with popular wallets or exchanges ,while they are not.
- Experience challenges when pulling out their tokens.
- Get a token reward whenever someone joins under you.
Examples of these kind of DApps running on Ethereum are:
- SportX
- Forsage
- HEX
- EthereumGold.io
- DoubleWay
- Tewkanaire(ETH),etc.
The Crypto verse is full of opportunities,and at the same filled with so much risk. A high-risk dApp can operate for long without issues,and might not really know the real person behind it.
It's best to engage in a personal research before investing in any dApp. And also ,try to invest what you can afford to let go.
HOW DO WE FIND THE INFORMATION OF A DAPP THAT WE WANT TO KNOW?
- The first step is to visit the website https://dappradar.com . You'll be taken to the home page of the site where you'll see a menu. Click on the menu.
.
- To check the latest ranking of all dApps,click on"Ranking"
A page that shows the latest ranking of all dApps will appear. The various DApps are ranked by their balance,users,volume and activity.
I have in mind to look up pancake swap which is listed there as number two . To check the details of pancake swap you click on it's icon.
On the next page that will appear, details of pancake swap will be seen. Details such as: Total value locked, historical activities,market capitalization,token and it's price,etc are found there
CONCLUSION
The evolution of dApps with features that are outstanding has given them the potential to become self-sustaining resources because they allow their stake holders the opportunity to invest in their development. It can be observed from how fast DApps have become popular that they are well on their way to top and best the currently available conventional applications in the coming years for reasons like; cloud computing,payments, storage, etc.
cc: @dilchamo
Good day professors @sapwood , @nane15 , @wahyunahrul , @dilchamo , pls my post is 4 days old already and it has not been graded nor curated, pls can something be done about it?