How and Why are Apps Built on the Ethereum Network?

To an outsider, the two largest coins on the cryptocurrency market – Bitcoin and Ethereum – might seem very similar. They both have their own digital token – BTC and ETH – they both run on a decentralised blockchain network, and they have both steadily gained in users and value since their creation – 2009 and 2013, respectively.

For those invested in cryptocurrency, however, it is easy to note the fundamental differences. Those who trade Bitcoin do it on a simple, sturdy POW network which is designed as a financial solution to traditional fiat currency. Those who trade Ethereum do it on a platform designed to offer a little bit more – to change the workings of the internet before the transition into Web3.

It has been doing this through what’s known as “smart contracts.” These contracts are created and distributed inside Ethereum’s blockchain network, allowing anyone with a crypto wallet to easily create their own decentralised applications and kill off the unintentional – and unnecessary – gathering of data that comes with traditional “third-party” applications today.

The How

An Ethereum app – or dApp – is made using a smart contract, which is designed to execute the terms, conditions and rules without the need for human involvement. They are also made to be open source, so anyone can view or use the code which was used to create them.

Critically, these apps are created on blockchain and communicate with blockchain, meaning they differ entirely from any ordinary, centralised app. If you were to log onto a website on the internet, the chances are it is centralised, meaning the page will contact an API to access your data from a centralised database.

With a dApp, however, the same website would contact the smart-contract API, bringing the data from the blockchain network– providing direct interaction between the application providers and the users themselves. This stops centralised “third-party” authorities from obtaining data simply through the click of a button and ultimately makes the internet a far more inclusive, privacy-respecting space.

The Why

There are a number of reasons why dApps are becoming so popular on the Ethereum network. For starters, any user who accesses the dApp is no longer giving up their data to a centralised network. This has been an ongoing issue within the world of Web2, where users have the ability to access and engage with a wide range of apps – from social media to entertainment, to finance, to games – but only in exchange for their own personal information. With a dApp, this is no longer an issue, as everybody’s data is stored on blockchain, and there is no centralised authority behind the application to access it.

As well as this, decentralised apps are far more simple when it comes to development. Anyone can create a dApp on the Ethereum network. All it takes is to follow the guidelines and tutorials, many of which are given on the network itself. The apps don’t suffer as a result, either, as they are far more robust and flexible compared to centralised apps, which need connectivity to a single server in order to function. If a single node’s server goes down on a decentralised app, the user will suffer no downtime.

A Further Explainer

As mentioned previously, Ethereum is essentially laying the groundwork for Web3, which is set to become properly integrated sometime in the next decade. With Web3, users will no longer have to be concerned about their security and the stability of the application they are using, as it is all run on a blockchain network to alleviate those issues.

Whilst this is an exciting prospect for Ethereum users and investors alike, not everybody is seeing it as a positive. As of right now, although they are easy to develop, Ethereum dApps are still harder to maintain than ordinary, centralised apps. This is because they are running between peers with different systems and softwares, making the environment far more complex. For instance, if maintenance, updates or debugging needs to be carried out, then every peer in the network will have to update their node software, which can cause a few issues when it comes to the end-user experience.

As well as this, dApps are still a relatively untested phenomenon. If businesses or individuals wish to create an app on the Ethereum network, the traditional means of running it changes, including security. As mentioned previously, security is mainly increased when it comes to dApps – a dApp will only fail if every computer in the network fails, which is highly unlikely – but this means that the traditional security solutions no longer apply, which may cause a problem for nodes unfamiliar with dApp-specific security, and could lead to poor user experience, slower speeds, or the breaking down of the app altogether.

The Future For Ethereum

With this being said, Ethereum and its applications are still in the teething phase of development, and the promise that they show far outweighs the concerns. The open-source software gives a number of industries a chance to bring innovation to their services and capabilities, which is part of the reason why the number of dApps is continuing to grow year-on-year. As of late 2022, there are currently just over 2,700 dApps in existence on Ethereum’s blockchain, each of which offers users a different way to interact and participate with blockchain technology.

It is important for any app to have the flexibility to develop, and dApps appear to offer this, allowing various applications to stand out from the crowd and offer the user something different. As the years go by, it is likely that the issues at this present time will be ironed out and both creators and users will choose flexibility over centralised traditionalism. If this is the case, it will also spell out a successful future for Ethereum itself. It has been predicted for a while that – by the time Web3 is fully integrated in the 2030s – Ethereum could be the leading coin in the cryptocurrency market, overtaking Bitcoin in what is described as the flippening. Although it would have been difficult to imagine this a few years ago, it’s certainly difficult to write off this expectation now, especially with the amount that Ethereum has to offer.