In crypto, “decentralized applications” are commonly known as dApps.
Most crypto websites, protocols, and interfaces can be classified as dApps and are accessible through a DeFi wallet like XDEFI Wallet. These projects are essentially smart contracts that have a certain functionality with which users can engage by connecting a DeFi wallet. This smart contract executes code for financial applications such as a marketplace, staking protocol, money market, decentralized exchange, etc. These dApps deviate from the standard application one may find on Apple or Google App stores. In contrast to “centralized” applications that are corporate-owned, collecting data on users, and unlikely to be open-source, decentralized applications are interfaces for trustless, on-chain interactions that enable users to participate in blockchain financial systems.
The concept of a dApp should be one that is decentralized, with open source code so any user can verify the activities of the program and that the smart contract will do what the developers claim. These dApps also do not need to register users or collect personal or location data, so ideally, anyone can use them anywhere in the world. Most importantly, dApps also tend to be censorship-resistant and immutable as no one entity controls them, making them impossible to “turn off” as it’s just code being run on a blockchain.
Some potential drawbacks are that dApps can only be as fast or secure as the blockchain they are deployed on. Additionally, the very fact they are open source makes them susceptible to being “forked” (i.e. code being manipulated by other parties and redeployed with changes), creating a competitive effect for some models such as the Decentralized Exchange (DEX) Sushiswap forking from Uniswap’s code. Unlike centralized apps, dApps are not subject to copyright or patent laws, embodying the spirit of financial and transactional independence for users.