What are dapps?

Decentralized applications, also known as dapps, are apps that run on a blockchain network or a peer-to-peer (P2P) network. What does it mean to be decentralized? Unlike a standard app, which is typically controlled by a single company (think: Google, Spotify, Doordash), a dapp is an open-source app controlled by its users. Dapps cut out the middleman, so to speak, to allow users to connect with each other directly.

As with standard web apps, the uses for dapps are potentially endless—they can be used for financial, gaming, shopping, socializing, or anything else. But many people like dapps because they offer more data control and privacy than standard apps. With standard apps, the controlling company often owns your personal information. With dapps, your personal info lives in your crypto wallet, and you have complete control over which dapps can access it.

Dapps have front-end interfaces for connecting your crypto wallet. Once connected, you can conduct blockchain transactions. But not just any transaction — dapps follow instructions laid out in smart contracts, which are sets of rules written in code on the blockchain. Many of the most popular dapps live on the Ethereum blockchain.

• Control of your data: With standard apps, your info lives on a centralized server owned by the app’s controlling company—which could potentially share or sell your data to third parties. With dapps, your info lives in your wallet, and you decide how to share it.
• Privacy: Since you don’t have to share your personal information on dapps, transactions can be completely anonymous.
• Lack of censorship: Because there’s no centralized authority, the content shared on dapps isn’t monitored or controlled by a censor.
• Data portability: Right now, you likely manage dozens of unique accounts and passwords for all the apps you use. But someday, your wallet could contain all your personal info in one place, which you could plug into different services. There’s a lot of optimism that dapps could enable this in the not-too-distant future.

• Security issues: Just like standard apps, dapps can be the target of hackers and phishing scams. Some dapps, such as bridges that allow transfers between blockchains, are at higher risk of fraud. Dapps don’t offer the level of security that standard apps typically do, because they’re not backed by centralized companies that can protect you if your data is compromised. That means you’re on your own if something goes wrong (like a hack).
• Usability: The interfaces of dapps might be unfamiliar from the standard apps you use regularly. Dapps may provide an entirely new model for interacting online, and there’s still a lot to figure out to ensure they’re easy to use for everyone.
• Transparent transactions: Because all transactions are recorded on the blockchain, if someone knows your wallet address, your transactions could potentially be traced back to you.