The general definition associated with decentralized applications (DApps) is an application that functions through a peer-to-peer network as opposed to a single source or computer. The existence of such an app in cyberspace does not depend on a single authority. It can operate under a blockchain network or any other form of the peer-to-peer system (read more about blockchain here). Moreover, it is important to understand that the definition of these applications can differ with respect to the institution. The notion of blockchain originates from the concept adapted by bitcoin which uses cryptographically-stored records. There are limited tokens in the system as a means of checking the value of the currency. Different DApps exist for different purposes but the key property of the application is the independence from a traditional single server database.
In an attempt to understand the technical side of the cryptocurrency craze, I read the book, Bitcoin and Cryptocurrency Technologies (http://bitcoinbook.cs.princeton.educeton.edu). It was a great book and I’d highly recommend it. What follows is somewhat of a book report on the beginning chapters, a look under the hood at what a blockchain is.
The term blockchain has been floating around both the tech and finance communities a lot in recent years. But what is blockchain?
Blockchain is a digital ledger of all transactions across a peer to peer network. Each user in the network will have a full copy of the whole blockchain, which includes data of all transactions. Let’s say a user wants to pay another user. He would encrypt the transaction and broadcast it to the network. The transaction gets put into a new block. The ledger is maintained by miners, who work to approve the transaction and validate it using cryptographic techniques. Then the block is added to the blockchain.