(source: https://www.storyblocks.com/stock-image/hand-touch-y-icon-from-mobile-phone-rjnx9irv7dbj6glknj7) – By Tyler Koslow
Decentralized applications (better known as dApps) are becoming the cornerstone for businesses seeking to build stronger security and forge better user relations.
Ethereum leads the way in dApp development, essentially using blockchain technology to correct what many developers see as a weakness in the internet’s design: lack of security. Functioning as an app store of sorts, Ethereum allows anyone to build and publish their dApp, thereby connecting users directly to providers.
According to the Ethereum white paper on GitHub, there are three types of dApps: the ones that manage money, those where money is involved but is not the central function, and “other” apps that involve things like voting and governance systems.
How can dApps be applied to your own business applications? Let’s take a look at the nature of dApps and smart contract services, both of which utilize blockchain technology to offer secure business solutions.
What Is a dApp and What Does it Do?
In order to be recognized as a dApp, the project or application in question must meet a few standards. For starters, the application in question must be completely open-source and operate autonomously, preventing any single entity from hoarding the majority of tokens. Therefore, the protocol of the dApp can only be altered through a majority consensus from the user base.
Secondly, a dApp developer must ensure that data and records of operations are stored cryptographically in a public and decentralized blockchain. By doing so, the application will have no particular central storage point, which means that the data can’t be compromised or end up failing.
A dApp must also use a cryptographic token that grants users access to the application. Through utilizing BitCoin or a native token, the application will also reward miners and farmers for their contributions. Lastly, the application must generate these tokens in accordance with a standard cryptographic algorithm, acting as a proof of the value that the nodes are presenting the application.
How to Develop a Proper dApp for your Business Model
When coming up with a dApp business plan, there are four primary steps that a dApp developer should follow.
First and foremost, a white paper should be created that states the most critical aspects of the proposal, such as the overall project mission, coin distribution plans, consensus mechanisms and technical project descriptions. Once the white paper is completed, release the plan to the community and use feedback to refine the project.
Once the business plan is presented in a clear and concise manner, it’s time to launch a crowdsale for the initial tokens, while also opening up the project for further contributions. From here, the dApp developer will utilize the raised funds to develop and ultimately deploy the application.
The Role of Smart Contract Services
If you consider that dApps are websites that are blockchain enabled, then the smart contract would be the connecting point between the dApp and the blockchain. dApps are similar to traditional web applications, but the primary difference is that dApps use smart contracts connecting to a blockchain instead of a database utilizing an API.
Instead of running backend code on a centralized server, dApps have their code linked to a decentralized P2P network. The smart contract is just one part of the dApp, but also a very critical one.
Unlike dApps, which consist of both backend and frontend code, a smart contract is only made up of the backend. In other words, the smart contract connects directly to the blockchain, acting as the execution method of the dApp. So, if you want to develop only using a smart contract service, you need to combine several of them and employ third-party systems to handle the frontend.
How dApps Can Help You Develop a Profitable Business Model
The key advantage of utilizing dApps is that they improve fault tolerance and make it nearly impossible to attack or compromise. This makes it ideal for the distribution of essential components. dApps can ensure fast and secure applications that will enhance the customer experience.
As businesses must account for large increases in data from new emerging sources like social media, blockchain and dApps provide an efficient and affordable approach to storing big data. On top of that, dApps can also prevent bad actors from exploiting and stealing information.
Lastly, dApps allow contributors and customers to purchase tokens and become an actual part of the project. These user groups are able to exchange these tokens and benefit from the success of the dApp. Thus, business customers will also have skin in the game, and have equal incentives to want the business model to succeed.