Are Dapps the marketplaces of the future?

Dapps are decentralized applications hosted on blockchains. A well known example and probably the biggest, is Ethereum. They contrast with centralized apps like Uber or Airbnb. Chances are high that centralized apps shift towards a Dapp architecture. This article discusses this possibility.

Architecture of apps vs. Dapps

Characteristics and classification of Dapps

A decentralized application would typically exhibit the following characteristics:

  • Data are stored in a public blockchain

  • The Dapp makes use of tokens from the underlying blockchain

  • The Dapp is open source and works autonomously without central node

  • Tokens are generated thanks to a cryptographic algorithm, usually PoW or PoS

Based on these characteristics, we can classified Dapps into 3 types:

  • Type 1: the Dapp has its own blockchain and its own tokens

  • Type 2: The Dapp leverages a type 1 Dapp and blockchain. Yet has its own tokens which are created on the blockchain of the underlying type 1 Dapp

  • Type 3: The Dapp leverages protocols from a type 2 Dapp + some specific protocols, with the possibility to issue tokens with additional features, e.g. file storage

It’s been a decade since commerce is undergoing large transformations, with the rise of the so-called “on-demand” economy. A.k.a. the economic activity created by digital marketplaces and technology companies to fulfill consumer demand via immediate access to goods and services.

Numerous platforms like Amazon are swallowing massive market shares. In this context, Dapps can be perceived like a viable alternative with certain advantages to become the marketplaces of the future.

Building secured and traceable marketplaces

Thanks to blockchain’s peer-to-peer architecture and the use of practically tamper-proof cryptography algorithms, transactions are natively secured and traceable when the blockchain is public. Therefore, it’s very simple to follow transactions and the flow of products since tokens can serve either for payments, or to ensure the origin of products.

Building communal marketplaces

As seen earlier, Dapps are decentralized and distributed. As a result, the users are the one to decide how the Dapp works and evolve. In a context of lack of trust on the consumers’ side, the assumed neutrality of the community as the governing body is necessarily an asset: most of the power is taken out behemoth companies and equally redistributed to all the participants of the on-demand economy.

Building 100% Available marketplaces

Since Dapps are not hosted on central servers like classic marketplaces, they cannot practically be victim of failures or attacks that centralized app are used to deal with, e.g. DDoS, middleman attack, crashes. Dapps reliability is thus extremely improved.

The era of Dapps

For the time being, classic marketplaces like Amazon or Alibaba enjoy a significant monopoly and an insane effectiveness. It is very difficult to think of a Dapp that would challenge and disrupt them drastically.

However on a local point of view, Dapps have high chances to thrive. Many local short circuits are already involving communal networks. At this lower scale, it is very likely that some Dapps manage to grow very fast under the condition that their blockchains successfully deal with some technical issues such as their throughput rate.

Check the full version of Blockchain Quarterly (Q1 2019) report for more Insights.

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