With increasing interest in the possibilities of blockchain technology beyond cryptocurrency, decentralized networks like Ethereum are working harder than ever to create applications that live up to the original spirit of cryptocurrencies that made the technology a household name. These decentralized applications, known as dApps, are becoming increasingly powerful and attractive to users in a digital landscape fraught with controversy over privacy, security, and ownership. While you may have only just heard of dApps, they’ve been around for a while and offer users unique benefits (at the cost of a few drawbacks) that their more traditional, mainstream look-alikes can’t yet provide. But what exactly is a dApp? What are their unique benefits, and how exactly do they work?

A dApp is an open-source application whose backend is powered by a decentralized peer-to-peer network. In this article, we’ll focus on the decentralized applications built on the Ethereum blockchain and how that platform leverages a technology known as smart contracts to provide a variety of unique features across a variety of use cases.

dApps on the Ethereum Blockchain are built using a technology called smart contracts. These are programs that work similarly to real-world contracts, but differ in a few key ways. The main difference is that smart contracts are pure code and do not require a third party to review the contract. They are also fully automated and completely immutable once implemented. This is because smart contracts are essentially just if/then statements that execute once the conditions set out are met. For example, if you rent out your apartment to someone, you can embed the terms of your agreement in a smart contract that automatically executes itself – such as ensuring that the tenant has access to the apartment once they have paid their rent – leaving no room for either you or the tenant to misbehave (as long as the conditions are set intelligently of course) and protects both parties from each other. This completely removes trust from the equation.

Decentralized apps are also completely open-source, meaning you don’t have to accept any clever sales pitches or third-party guarantees about how they actually work; everything the app does is in the code for everyone to see. It also means that anyone can tweak and modify it or use it as the code base for their own creation. If we use the landlord-tenant example above, this would be like an open-source AirBnB that anyone can inspect or improve.