The Beginner’s Handbook to Decentralized Apps (dApps)

  • By Paramjit Singh

  • 31st May 2024

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dApps, an acronym for decentralized apps, has become the talk of the town. With the worldwide blockchain obsession across the globe, tech geeks are paving ways to disrupt the decentralized market. No surprise, the emerging technology has now taken over the app market as well.

 Google Trends report,on decentralized apps

According to the Google Trends report, interest in decentralized apps has also shown an upward trend over the last year. We have more stats for you! According to Crypto Potato, decentralized apps witnessed a whopping 77% rise in activity in the first quarter of 2024 and a 7 million daily active wallet user count.

What are decentralized apps or dApps? How does a dApp work? What are the features and types of dApps? What industries are using dApps? Are there any challenges faced in adopting dApps? What is the future of dApps?

If you’re looking for an answer to all these questions, you’re at the right place. We consolidated all the useful information with comprehensive research via our blockchain developers.

Let’s start with the basics.

What is a Decentralized App?

A decentralized app is a Web 3.0 app built on top of blockchain technology. Let’s expand the term ‘decentralized’ to get a better understanding of what a decentralized app is. Decentralized means that there is no central server where the data is stored; however, it uses a distributed ledger technology where the information is stored on a number of nodes. 

Similarly, dApps are decentralized apps as there are no third-party intermediaries. Let me explain it with an example! If you wanted to sell your digital book on a centralized network, you could use PayPal as a payment gateway and create a checkout store that gives the user a book after checking out. Here, PayPal acts as a third-party intermediary.
However, in the case of a dApp, you can directly sell your digital book to the interested buyer without the need for a third-party beneficiary. You can code a smart contract that will be implemented once a user clicks on the payment option.

What is a Decentralized App

How Does a dApp Work?

As discussed above, a decentralized app or dApp works on top of blockchain technology. The backend of the app works on a peer-to-peer decentralized network. A dApp also has a frontend and user interface similar to that of a traditional Web 2.0 app. You can also host the frontend on any decentralized server such as IPFS.

The dApps are usually written in robust programming languages such as JavaScript, C++, Ruby, Go, Python, Solidity, etc.

Although dApps function quite similarly to the traditional apps that exist on Apple Store and Google Play Store, there are some highlighting features of a dApp that are worth noting.

What are the Features of a Decentralized App?

Features of dApps

The following features of the dApp are noteworthy:

  • Decentralized: dApps are decentralized in nature, meaning that they do not function on a central server but rather on a distributed network of computers or nodes. For example, a decentralized application runs on Ethereum, a public, open platform.
  • Consistency: dApps operate the same way no matter what environment they’re running in, unlike centralized applications that run differently on various operating systems such as Windows, MacOS, Ubuntu, and Linux.
  • Dedicated Virtual Environment: All the decentralized applications run inside an isolated virtual environment called the EVM or Ethereum Virtual Machine. It is a virtual environment created to keep smart contract errors or buys at bay. This functionality helps in the seamless functioning of the blockchain network.
  • Open Source: There is no single server or entity that controls the functioning of dApps. These apps are open-source and the code is available for public inspection.
  • Agile: dApps have all the agility to function in various environments irrespective of the function that needs to be performed. When provided with the necessary resources, dApps can carry out any task. 
  • Incentivized: A dApp works on the model of incentivization to the users. It can generate exchangeable and tradable tokens as proof of value. These tokens act as rewards on the blockchain network.
  • Protocol Compliant: Since dApps work on various blockchain platforms such as Bitcoin and Ethereum, they function by following significant cryptographic algorithms to show proof of value. For instance, both Ethereum and Bitcoin function on Proof of Work consensus mechanism protocols. 

What are the Types of dApps?

Decentralized apps or dApps can be classified into various types based on consensus mechanism and functionality. 

Let’s first classify them on the basis of the consensus mechanism:

types of dApps on the basis of consensus mechanism
  • Type I dApps

The type I dApps are the foundational dApps that form the framework for other dApps to be build upon. They have their own blockchains. For example, digital currencies such as Ethereum and Bitcoin, and smart contracts.

  • Type II dApps

The type II dApps are the decentralized apps that function on top of type I dApps since they do not have a blockchain of their own.  They function on the basis of protocols and can have their own protocols. For example, the Omni protocol works on the Bitcoin blockchain.

  • Type III dApps

The type III dApps refer to the dApps with which a user interacts directly and performs actions on it. In other words, the type III dApps are built on top of type II dApps. These dApps have a decentralized marketplace or a digital wallet built on them. For example, an NFT marketplace to trade art or any other digital collectibles.

Now, let’s classify dApps on the basis of functionality:

types of dApps on the basis of functionality
  • Financial dApps or DeFi Apps

Financial dApp is a type of decentralized app that brings peer-to-peer (P2P) payment systems into the limelight. These apps eliminate the need for third-party intermediaries to enable and even create payment gateways. For example, Aave is a decentralized (DeFi) investment platform that allows lending and borrowing of cryptocurrency at both fixed and variable interest rates.

  • Governance dApps

dApps also have significant applications in the government sector, thanks to their unwavering transparency and credibility. These decentralized apps are being used in voting systems and Decentralized Autonomous Organizations (DAOs) that help make decisions on the basis of consensus protocols without the need for a central authority. 

  • Gaming dApps

Decentralized apps have opened the door to another dimension of possibilities by turning virtual characters and artifacts into unique and verifiable assets. You can sell, buy or trade these assets on various marketplaces or even make an NFT out of them. For example, CryptoKitties is a decentralized gaming app that works on EVM where users can sell, buy and trade virtual cats or kittens.

  • Social Media dApps

You can also enjoy decentralized social media networks through dApps. For example, Lenstube is a decentralized social media app where users can share videos, mint their username and create their own Web 3.0 identity. The app is powered by Lens Protocol.

What are the Various Industries Utilizing dApps?

Many industries across the globe have recognized the power of dApps. From real estate to logistics, the blockchain technology has left no stone unturned. Let’s explore the applications of decentralized apps across various industries:

  • Supply Chain Management

dApps implementation in supply chain management has transformed the way in which goods are tracked. The intervention of dApps has allowed direct communication with the business partners, thus leading to improved business operations, enhanced transparency and traceability. 

For example, VeChain is a blockchain-powered platform that improves business operations by enhancing the tracking of goods, products and processes. Another excellent example is the IBM Food Trust uses a private blockchain to provide actionable food supply chain data with immediate access to authorized users, right from the farm store to the end consumer.

  • Healthcare

The utility of dApps in healthcare is quite evident. It significantly helps in securing and managing patient data in a decentralized manner without sharing data with third parties. It also helps to enable interoperability between healthcare providers. 

For example, MedRec is a decentralized record-tracking platform that gives full access to patients over medical record distribution. Patientory is another blockchain-powered software solution that provides control of patient data and incentivizes them through tokens.

  • Real Estate

Blockchain technology has also spread its wings in the real estate industry. It has simplified property transactions and mitigated fraudulent activities since there is no involved beneficiary.

For example, Propy is a real estate transaction platform that uses blockchain for transparent transactions and allows to navigate real estate deals completely online. RealIT offers tokenized assets for investing in real estate as a blockchain-secure passive income source.

  • Entertainment

dApps are also infiltrating the entertainment segment and helping to create more personal relationships between the artist and his cult following. The blockchain technology has also helped in fair revenue distribution amongst the people working in the background in the entertainment industry and introduced direct artist-to-fan interaction.
For example, Audius is a decentralized music streaming platform where users can create immutable and timestamped records through which they can earn bonuses and can be incentivized. Another example is Theta which is a blockchain-powered network for video streaming.

What are the Challenges of dApp Development?

Now that we have talked about the bright side of dApp development, let’s talk about the major challenges that the world is facing in building dApps. The following are the concerning downsides of dApp development:

  • Scalability Issues

Blockchain technology does not offer scalability features like cloud computing. It often lags behind in working up to its full potential in times of network congestion. It often faces low transaction speed when there is a high traffic influx. Not to mention the excessive gas fees that is charged on every payment on the blockchain network. For example, Ethereum has a high gas fee.

  • Security Concerns

Although blockchain is a decentralized and credible technology, it is still not away from the hands of malicious attackers and hackers. Talking about smart contracts, they’re not yet safe to use since they’re prone to many vulnerabilities. You must remember that blockchain itself is a public ledger that offers some kind of transparency.

  • Difficult User Adoption

Unlike Web 2.0, which is easily accessible to users via search engines, blockchain is relatively less accessible. In fact, people are not familiar with the use cases of blockchain. The UI/UX of the dApps is also non-user-intuitive and difficult to adopt.

What is the Future of dApps?

Although there are still plenty of bottlenecks related to the worldwide dApp adoption, the future of blockchain technology looks quite promising. We can expect various emerging trends in the world of blockchain such as Layer 2 solutions, cross-chain interoperability and some notable advancements in blockchain technology. Since traditional cryptocurrencies such as Ethereum and Bitcoin are highly volatile, we can expect the adoption of stablecoins by merchants and enterprises.

Another potential impact of blockchain technology that we can expect in the near future is the enhanced decentralization of the Internet. We can also expect the adoption of a more equitable digital economy. 

Furthermore, the blockchain segment will be regulated in a streamlined manner to leverage the technology. For example, Dubai has already started utilizing blockchain resources to make it a smart city.


dApps are revolutionizing the way the world works. With an enhanced focus on data transparency and traceability, blockchain technology is becoming popular day by day. From supply chain management to the healthcare industry, every segment is exploring the scope of dApps and their decentralized nature. 

Whether you’re a blockchain-powered startup, business organization or enterprise looking to expand the horizons of your dApp app development project, Deftsoft is here to help. With a team of seasoned dApp developers, testers and UI/UX designers, we stand strong as a dApp development company. Established for more than 18 years, our distinguished dApp development services can help you stand out from the crowd and gain a competitive edge.

You can check out our other blogs to gain deeper insights into blockchain technology and beyond.


1. What is meant by a dApp?

A dApp is a decentralized app, meaning that it works by leveraging blockchain technology to build app solutions that do not require any third-party intermediary. It usually works by implementing smart contracts with its frontend and backend, working on consensus mechanisms such as Proof of Work (PoW) or Proof of Stake (PoS) to validate and verify transactions.

2. What are the main features of a decentralized app?

The main features of a decentralized app include that it is open-source, consistent, works on Ethereum Virtual Machine Machine (EVM), agile in nature and works on consensus mechanisms such as Proof-of-Work (PoW) and Proof-of-Stake (PoS). Another important feature of a dApp is that it uses smart contracts for implementing payments and transactions.

3. What are the types of dApps?

There are different types of dApps based on the consensus mechanism such as type I, type II and type III dApps. Other types of dApps include financial, governance, gaming, and social media apps.

4. What are the various industries where dApps are utilized?

The various industries where dApps are utilized include supply chain management, healthcare, entertainment and real estate. For example, it is used for sharing end-to-end data for tracking goods from manufacturers to merchants in supply chain management.

5. Give an example of a dApp.

Audius is a decentralized music streaming platform where users can create immutable and timestamped records through which they can earn bonuses and can be incentivized. This app is great for selling timestamped records as a unique asset in the entertainment segment. A lot of people compare this dApp to Spotify and even find it better than the latter.

Written By
Paramjit Singh
calendar 31st May 2024
Paramjit Singh, heading the web applications department at Deftsoft, has immense experience in creating user-friendly and easy to navigate websites making use of the latest technology like PHP, HTML, CSS, Java, JavaScript. He is known for his amazing IT skills and ability to manage the team, creating benchmarking output.

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