What Are the Benefits of Building Decentralized Applications With a Blockchain?
This technology is, of course, not ideal, and some problems are being worked on. One possible issue with blockchain technology is security.
Just like centralized apps, decentralized apps have benefits and drawbacks. From the very beginning, DApps offer many advantages over a traditional apps are:
- P2P network: DApp doesn’t rely on a single point of failure like a hosting server. This ensures no downtime or restrictions.
- Open-source: DApps offer users the ability to see code changes. Furthermore, users can read the code, but they don't have to influence its changes. As a result, this enables the ecosystem to grow faster and more securely.
- Data storage: Data is stored in blocks with no centralized authority.
- Transparency: Decentralized cryptographic data blocks should be validated and proven to be valid after they are considered a reliable source of truth. The second key aspect is that interaction with DApp doesn’t need to provide factual identity. Furthermore, users can access stored data in the blockchain from the outside.
This technology is, of course, not ideal, and some problems are being worked on. One possible issue with blockchain technology is security. First, a smart contract audit should be the first step to securing any dApp. During a smart contract audit, you can identify the vulnerabilities of your smart contract code and find ways to fix them.
The second step is performing penetration tests is another vital step to ensuring the security of dApps. Penetration testing can help uncover potential attack vectors, find hidden vulnerabilities, assess node vulnerabilities, and test APIs. The most effective combination is performing penetration tests and auditing the smart contracts.
Additionally, developers must ensure that key information is not embedded in dApps or public files. Using cryptography to verify a user's identity is a great security measure as long as no one else has access to the key. Thus, wallets and private key information should be protected. Moreover, protecting user information is also a key factor because nobody wants their personal information to be exposed. Developers must ensure that users' data remains confidential.
Besides, no matter how popular the blockchain topic is, it has limitations on use, such as:
- System scalability: When we talk about blockchains' scalability, we refer to their ability to process more transactions. Running a bitcoin node is relatively cheap and can be done even on technically weak devices. But since thousands of nodes need to be aware of each other's activities, there are certain limits to their throughput. Limits are placed on the number of transactions that can be processed on the chain, all to prevent the chain from rapidly growing to a gigantic size. If it becomes too large and fast, the nodes will not be able to interact with each other quickly. Moreover, if the blocks are too large, they will not be able to relay over the network quickly.
- Limited bandwidth: If we are talking about transactions within the banking system, then the blockchain loses in terms of transaction speed. The most famous blockchain technologies are often slower than the daily transaction networks. Bitcoin processes up to 7 transactions per second, Ethereum - up to 20 transactions per second. When Visa process more than 2000 transactions per second. In addition, when the number of network users increases, the transition processing takes longer.
- Transaction pricing: Depending on the network activity, transaction fees can be small or large. Market forces can also affect your fees. In contrast to high fees that can hinder wider blockchain adoption, very low fees may be security risks.
- Deployment pricing: The cost to build a blockchain app depends on various factors, including app features, complexity, type of blockchain, a blockchain platform, and other technology stacks. For example, private blockchain costs approximately $1500/month; public blockchain costs around $0.01, or transaction-based public blockchain costs about $750 for 3rd party.
- Hacking risks: It is believed that the blockchain is more secure than many modern programs. However, sometimes there are hacks of applications and systems built on the blockchain. A dilemma arises - on the one hand, it is believed that the blockchain is secure. On the other hand, we see news about hacking exchanges and stealing personal data.
- Difficulties in updating smart contract systems: Several reasons force smart contracts to be updated: errors in the code, changes in business requirements, and acceptance of community proposals to change how the contract works. However, the main advantage of smart contracts is that they cannot be modified. This also results in a consequence, that system maintenance updates can not be done with classic development approaches. Though developers have found solutions that allow changing smart contracts, this is a labor-intensive process.
There are a lot of concerns about this technology and, naturally, something new arouses some worries. Despite these issues, blockchain technology will likely evolve in the coming years. Technology has a way of sneaking past artificial barriers, just as nature does.
Use Cases for Decentralized Apps
With that in mind, here are the particular use cases for decentralized apps to get you started on your decentralized journey:
1. Non-fiat coins or store-value coins.
It means money issued by people or groups but not a country. Now, this, of course, was the first use case for decentralized applications using blockchain technology. Blockchain solves critical elements when it comes to making money useful. Furthermore, remittances are more reliable since blockchains are more fault-tolerant than classical systems. Transfer data is visible and can always be checked or confirmed from the outside of the system. Moreover, blockchain technology makes it possible to safely transfer money to anyone on earth who access the network.
2. The tokenization of real-world assets.
The tokenization of real-world items into digital is a reality implemented with DApps and blockchain. It is valuable because authentic digital certificates should approve almost everything you own. Digital certificates can not be duplicated or forged. Blockchain shows how we begin separate ownership from physical possession for many things. Tokenization makes a significant impact on the way we use items in the future. It is a particular use case for the near future.
3. Consumer entertainment use cases.
The central aspect of this use case is game applications and video games. The global video game industry makes 150 billion per year, most of which comes from selling virtual items, avatars, skins, etc. Selling virtual assets is a great business model for video game companies, but it is not so great for players. People spend hundreds or thousands of dollars to buy virtual items and never own them. Game companies rarely allow players to trade or resell all this digital property. Property that players paid for. Now, if these virtual items are created on a blockchain, it would make it possible for hundreds of millions of video game players to own and trade them directly.
As you can see, there are a lot of use cases for DApp. I believe that with the development of technology, the scope of applications will continue to grow in the future.
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