What are smart contracts?
Smart contracts are computer programs that operate on a blockchain protocol. Smart contracts are executed when certain predefined conditions are met. These programs implement agreements between users for immediate results without intermediaries. These automated programs continue the workflow by efficiently moving to the next task when certain preconditions are fulfilled. Smart contracts work by following programming statements like if, when, or then that are written into a computer code. A network of computers executes the tasks once these programming statements are verified.
These tasks include issuing a ticket and sending notifications, registrations, or transactions between users and many more. Blockchains are updated immediately with a new block once the process is complete. No changes can occur to the transaction data once it is added to the blockchain.
What are DApps?
Decentralized applications are known as dApps. These applications run on peer-to-peer networks and also include a user interface. These applications function similarly to ordinary applications but are built using smart contracts. DApps are a result of blockchain developers giving their products more utility. DApps are unique applications linked to a blockchain network.
DApps are a part of the software that interacts with the blockchain and controls the state of users on the blockchain network. They have a standard website or mobile app with a user interface like any other ordinary app. The front end of a dApp is built to depict what you can see, while the back end is developed to support all the business logic. There are many types of dApps such as financial applications, gaming, exchanges, marketplaces etc. These dApps let users manage their crypto tokens and also exchange them. Another use for these apps is for real-world enterprise connections. For example, supply chain organizations use dApps to manage their shipments and smart contracts to automate many processes.
Difference between dApps and smart contracts
You can understand the concept of blockchain better if you know how its building blocks function; smart contracts and dApps. They are the most vital pillars of a blockchain network.
- DApps are applications that run on a blockchain network while Smart contracts are the power source of these applications. Smart contracts are an interface between blockchains and dApps
- You can think of smart contracts as backend codes and dApps as user interfaces that directly interact with users
- Smart contracts make dApp function based on predetermined rules. DApps are built using smart contracts and connect users with providers
Pros and cons of DApps and smart contracts
Let us look at some of the pros and cons of dApps and smart contracts.
Pros of Smart contracts
- Smart contracts are self-executing codes stored on a blockchain network. They are immutable and so reliable
- The Smart contract transactions are transparent and verifiable by all the users involved
- These codes are a trustless interface, and hence there is no need for a centralized authority
- Smart contracts reduce costs as they eliminate intermediaries
- These codes have high execution speed due to the computational model rather than going through bureaucratic processes
Cons of smart contracts
- Smart contracts are computer codes, leaving scope for human errors
- Smart contracts mainly deal with financial transactions and can cause severe monetary collapse if exploited
Pros of DApps
- DApps are open-source applications
- There is no need for intermediaries due to the decentralized consensus mechanisms
- DApps have no centralized point of failure
- These applications use trustless computation
- DApps have almost zero downtime
Cons of DApps
- DApps can be hard to maintain if there are any bugs in their underlying code
- There can be network congestion in dApps
- Performance overhead can occur in dApps
What Are the Similarities between the two?
DApps are built using smart contracts. Both run on a decentralized platform and function automatically without being controlled by a centralized entity. Both Smart contracts and dApps mainly run on the Ethereum blockchain.
Conclusion
Our technology world is evolving at a faster pace due to the improving features of blockchain technology. Blockchain technology can be implemented by businesses to have a turnaround and witness growth. This technology can help a struggling company to stand out from its competition. Businesses should do their due diligence and understand the basics of blockchain; like DApps and Smart contracts, before adopting them.
The Ethereum blockchain introduced dApps and smart contracts to the mainstream. It is important to pay attention to security protocols due to the ever-increasing use cases of dApps and smart contracts. There is a need for regular audits of dApps and smart contracts to secure blockchain networks.
On a final note, DApps and smart contracts are great tools for automating processes and ensuring the accurate execution of financial or other operations.
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