Bitcoin Decentralized Apps (dApps)
What is a dApp?
A decentralized application, also called dApp, is a digital application that can run autonomously through the use of smart contracts on the blockchain or other peer-to-peer networks. While often built on the Ethereum network, dApps are spreading to a number of blockchains including Bitcoin via Stacks, BNB, and EOS.
Dapps follow blockchain-based Web3 core principles and aren't controlled by a single authority. A dApp is operated on a peer-to-peer or blockchain network, enabling users to make transactions without relying on a central authority or third party. The user of a dApp will pay an amount of cryptocurrency to download and use the program's source code, otherwise known as a smart contract, and pay transaction fees in cryptocurrencies to complete interactions. Those transaction fees are paid to the validators of the blockchain.
Unlike traditional apps, which use centralized servers, dApps are open-source and their data and records are public. The network is secured through cryptographic tokens and maintained by multiple users (nodes). Use cases of dApps include DAOs, DeFi (decentralized finance), DEXs, digital asset exchanges and NFT marketplaces such as LooksRare on the Ethereum blockchain. They can be accessed with a cryptographic token and can adopt cryptocurrencies like ETH, or generate a native token using a consensus algorithm, such as Proof of Work (PoW) used by the Bitcoin blockchain, or Proof of Stake (PoS), now used by the Ethereum Blockchain. Dapps are often developed to prioritize functionality, maintenance and stability. It can be difficult to make changes to the backend code, and the user interface can be harder to work with.
Some examples of dApps include Peepeth, a social network alternative to Twitter; Cryptokitties, a dApp game that allows users to buy and sell virtual cats; Uniswap, a DEX that enables users to swap tokens peer-to-peer; and MakerDAO, a decentralized credit service supporting the stablecoin Dai and allowing users to open a collateralized debt position (CDP).
Bitcoin, created in 2009 when Satoshi Nakamoto minted the genesis block, was rarely a part of the discussion on smart contracts until just a few years ago. It was designed to be a decentralized cryptocurrency, leaving out smart contract functionality, making it difficult for developers to work with the syntax. Therefore, dApps built on Bitcoin would have very limited possibilities and the already challenging scalability would be an issue.
Stacks made bitcoin smart contracts possible, allowing developers to build Web3 dApps, while enjoying the security of Bitcoin. Stacks functions as the smart contract layer for Bitcoin, through the Clarity programming language, enabling projects that can natively use BTC, unlocking immense value and helping the growth of blockchain technology adoption. Stacks is a layer 1 blockchain that uses a consensus mechanism called Proof of Transfer (PoX), which has miners pay in BTC to mint new Stacks tokens.
Developers can write fully expressive smart contracts, allowing the creation of new types of apps and dApps, use cases, NFT marketplaces and DeFi apps.
Some examples are Arkadiko, which enables users to take out a self-repaying loan in USDA (a stablecoin) that is backed by their STX tokens, and InfinitySwap, where you can transfer your BTC directly to another Bitcoin address to enter a liquidity pool.
Dapp development is still in the early stages, but the ecosystem is expanding rapidly. Through the use of decentralized networks and smart contracts, dApps have the undeniable potential to bring even more innovative use cases to the market, both in the metaverse and the real world.
Learn more about Stacks and the ecosystem on social media, and when you're ready to jump in, head over to Hiro or Xverse to set up your Stacks compatible crypto wallet. Your wallet will also allow you to get started on Gamma.io, the leading NFT marketplace on Stacks.