What Is a Decentralized Application (dApp)?

By Adam Levy – Updated Sep 5, 2025 at 12:06 PM

Key Points

dApps run on blockchain, are open-sourced, and immune to single-point control or failure.
Invest in dApps by buying tokens like UNI for Uniswap or ETH for Ethereum's network.
Blockchain constraints limit dApp scalability and user-friendliness, complicating updates.

A decentralized application, also known as a dApp, is a program built on top of a decentralized network using blockchain technology. Decentralized applications will combine the power of smart contracts with a user interface to allow people to utilize blockchain technology in new ways. dApps aren’t controlled by a single authority, and their rules are enforced by the network maintaining the blockchain.

This article will review what decentralized applications are, how they differ from traditional computer applications, examples of dApps, advantages and disadvantages of dApps, and how you can invest in decentralized applications.

Loading paragraph...

Computer parts with letters spelling CRYPTOCURRENCY digitally superimposed on them. — Image source: Getty Images.

Loading paragraph...

How to Buy Amazon Stock (AMZN)

Want to invest in the world's second-largest retail company? Get pro tips on picking the right method for your portfolio.

8 Benefits of Cryptocurrency & Why You Should Use It

Far from being a passing fad, cryptocurrencies offer a growing number of benefits.

Crypto vs. Stocks: What's the Better Choice?

Should you invest in cryptocurrency or stocks? Find out the advantages and disadvantages of each so you can choose wisely.

How to Create a Well-Balanced Crypto Portfolio

Learn how to create a balanced crypto portfolio.

Loading paragraph...

About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

TMFnCaffeine

@admlvy

Adam Levy has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum, Solana, and Uniswap Protocol Token. The Motley Fool recommends Polygon. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.

View Premium Services

Uniswap. A decentralized exchange enabling users to swap one cryptocurrency for another without going through a central intermediary.
Aave. A protocol for lending, borrowing, staking, and earning interest on cryptocurrency. Aave creates liquidity for other decentralized finance (DeFi) apps.
Cryptokitties. A blockchain-based game where users collect, breed, and sell non-fungible tokens (NFTs) depicting cats.
Steemit. A blogging and social media application. Users can earn its native currency, STEEM, for publishing and curating content.
Opensea. An NFT trading marketplace.
Audius. A music streaming application. Streaming rights are owned by users holding an NFT representing an audio file. Rights holders are paid whenever someone streams that track.
MakerDAO. Allows users to stake their Ethereum (ETH -1.39%) tokens in exchange for a line of credit. They can access the credit through the DAI (DAI +0.07%) stablecoin, which is pegged to the U.S. dollar. This allows people to access the value of their cryptocurrency holdings without having to liquidate and pay taxes.

Advantages and disadvantages of decentralized applications

Decentralized applications have several advantages and disadvantages compared to their centralized counterparts.

Advantages

Privacy. You don’t need to provide any identifying information to use most dApps.
Security. Since the data and application are stored on the blockchain, bad actors cannot modify data or generate fraudulent data en masse. The only way to interact with the blockchain is by using your private key.
Open. Anyone can use a decentralized application in any way they see fit. The dApp creator cannot censor or block users. (This may be seen as a disadvantage in some cases.)
No downtime. Since the application lives on the decentralized network, there’s no single point of failure for a dApp. As long as at least one node is operating, the dApp will be available to anyone that wants to use it.

Disadvantages

Difficult to scale. Blockchains are limited in the number of transactions they can perform per second. For example, Ethereum’s network can only process about 30 transactions per second. Solana (SOL -2.15%) supports as many as 50,000 transactions per second.
Hard to use. Decentralized applications typically require some technical know-how and additional tools beyond a simple web browser or mobile app. Creating a simple user interface can prove difficult and may hinder applications seeking mass adoption.
Difficult to maintain and update. Data on the blockchain isn’t meant to be changed. Since dApp code lives on the blockchain, making updates to how a dApp functions can be very difficult.

What Is a Decentralized Application (dApp)?

Key Points

How to Buy Amazon Stock (AMZN)

8 Benefits of Cryptocurrency & Why You Should Use It

Crypto vs. Stocks: What's the Better Choice?

How to Create a Well-Balanced Crypto Portfolio

About the Author

Our Guides

Premium Investing Services