DApps stands for decentralized applications, which are digital apps or software programs built and run on the blockchain. This means that their backend code runs on a decentralized peer-to-peer network (P2P) instead of centralized servers as standard web apps do.
The majority of dApps are built on the Ethereum blockchain using smart contracts and have a variety of purposes including finance, enterprise solutions, gaming, and collectibles.
According to the dApp white paper, for an app to be truly classed as a “decentralized app” it must meet four main criteria:
Open-Source: The application must be entirely open-source, operating autonomously with no single entity owning the majority. The application protocol can be adapted in response to market feedback, but any proposed changes must be approved by the consensus of its users.
Decentralized Blockchain: All application data and operation records must be cryptographically stored in a public, decentralized blockchain, avoiding a single point of failure.
Cryptographic Token: The application must use a cryptographic token, such as Bitcoin or a token native to its particular blockchain. The tokens are necessary for access to the application and rewarding blockchain miners.
Consensus Method: To be a dApp, it must generate tokens according to a consensus method such as Proof of Work or Proof of Stake.