What the Heck is a Decentralized App Any Way?
I was at the Token Summit and Consensus Events in New York earlier this week and if one were to create a tag cloud of words you heard the most as you walked the floors, “decentralized” would be the biggest and boldest one. And by some distance.
But what is a decentralized app exactly? And do end-users really care?
Truth be told, most users of consumer and enterprise software could not care less about the “decentralization” jargon. You can almost see the haze descend on dazed faces when people get assaulted with a decentralized “something” pitch.
But users’ outlook can change dramatically once you explain what “decentralized” truly means in terms of benefits and how it helps the user do a “job to be done” better.
There are three broad classes of benefits to users from decentralized apps related to A) Data, B) Censor Resistance, and C) Core Job to be Done.
While we surely have more evidence for A) and B), C) might well be the one to decide if decentralization ends up being a fad or the real deal.
A — Data Related: More Private, Secure, Portable, and Monetizable.
A1: More Privacy: Users’ data belongs to them and them alone. They can explicitly provide and revoke access. They can communicate peer-to-peer without a big brother peering over.
A2: More Security: Users’ data is considerably more secure because hackers do not have one central data store to hack once and get access to the trove of millions of users. A determined hacker would need to hack every user’s decentralized data store, one at a time, and this makes it simply not worth the time and effort.
A3: More Portability: Users can take their data with them if they want to leave any specific network or service. As the decentralized app ecosystem gets more established, it will be possible to seamlessly plug any dApp into your data. Application logic and data are separate from each other.
A4: Monetization: In some contexts, users might be able to monetize their dApp activity and underlying data for financial rewards.All allocation of rewards and financial transactions are fully transparent on the blockchain making it hard for users and developers to cheat. Thus decentralized applications working in conjunction with a distributed ledger are more likely to result in a true meritocracy.
B — Resiliency-Related: Protected from Censorship and other modes of failure
B1: More Failure-Proof: The company developing the service might go out of business, the developer might lose interest and stop innovating, or the government might try to shut it down. But the app or service embodying the protocol is more resilient because central points of failure have been eliminated. Data is decoupled from the protocol and controlled by user; even in the case of an unexpected black swan event, there are likely enough decentralized full nodes to allow for the protocol to continue into the future, with other developers forking and developing the code going forward.
C — Is the “Job-to-be-Done” Better Accomplished with the dApp (Decentralized App) than the cApp (Centralized App) alternatives?
C1: Easy to Find? Is the dApp easy for users to search and find? What is their starting point?
C2: Easy to Activate? Is it easy to create a new user account and activate the service? Is it simple enough for non-technical users? Can users easily login with third party ids and wallets?
C3: Easy to Use? Is the dApp easy, fast, and intuitive to use, irrespective of the underlying technologies and how it processes transactions?
C4: “Job to be Done” Metrics: Are the unit economics (value realized vs. cost and time invested) and other operating metrics for the specific “job-to-be done” substantially better for key stakeholders with the dApp relative to the cApp?
C5: Rate of Innovation: Do the capabilities of the dApp improve faster over time relative to the cApp because of the nature of the underlying platform and ecosystem, and its ability to deliver innovation faster?
The trade-offs between these sets of variables obviously vary by use case and industry, but fair to say that to be successful at scale beyond early adopters, a dApp needs to be as usable and functional, if not more, than its cApp equivalents, accomplish the “job to be done” substantially better, while being an order of magnitude more private, secure, portable, and resilient.
That might seem a tall ask with all the underlying dependencies on still-evolving blockchain infrastructure and middleware, but that is indeed the litmus test for real disruption.
Developers and companies building dApps, please note: Irrespective of what problem you are seeking to solve — cheaper P2P Insurance, more secure crypto exchanges, more effective recruitment at lower cost, lowering cost of acquisition in marketing, or reducing drug development and approval cycles — blockchain and dApps are good enough only to the extent that these problems are actually solved better relative to current options.. Let that be our true North Star.