If you are overwhelmed by the vocabulary of blockchain technology, you are not alone. Blockchain is at a turning point for wider adoption, and businesses are increasingly interested in making the most of the new technology at exactly the right moment.

While blockchain developers may be familiar with the latest terminology, most business owners are still learning the ins and outs of this innovation. Many blockchain-related terms that sound unfamiliar now will soon be part of the everyday vernacular.

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To understand how distributed business networks and decentralized apps (or “dApps”) can help your business turn a new page, you’ll need a basic grasp of what they are and how to differentiate dApps from smart contract services.

What Makes dApps Different from Smart Contracts?

Although you don’t need an in-depth course in app decentralization, you need to understand some of the technology to have a better picture of its business benefits. For example, although many people use blockchain technology and decentralized apps as synonyms, this is not completely accurate. The same goes for dApps and smart contracts.  

A dApp is an application, and a smart contract is the execution method. As a business owner, you don’t get to change the rules of the blockchain technology, but you do get to set the rules for the smart contract services and choose what works best for a particular business solution.

Even if you are not a developer, you probably know that most conventional web applications use HTML, CSS or javascript tools for page rendering, and API for displaying personal details on a webpage. From the front-end user’s perspective, the technology is almost the same. The critical difference between conventional technologies and blockchain technologies is the way the front end connects to the database or the blockchain. If you deploy smart contract services, instead of API connections, you will be using smart contract connections.

Another way to differentiate dApps and smart contracts is to use a word-character comparison. Using both lexicology and semantics, you can associate characters with smart contracts and words with dApps. Smart contracts don’t make sense unless they are executed in dApps. We get that contracts, like characters, have a role, but we cannot make much use of characters unless we arrange them into words to produce deeper meaning.

Simply put, smart contracts are pieces of code that compose dApps.

Which Businesses Can Benefit from Smart Contract Services?

Smart contracts are made in such a way that they self-execute following a predefined set of rules. Companies can now execute many tasks online that they used to do on paper.

For example, smart contract services can facilitate a business deal by speeding up the approval process and reducing the need for paperwork and traditional signatures. You can use them to automate processes and eliminate unnecessary steps and participants. Finally, you can use them to provide an unchangeable source of records, which can improve the trust level among all parties involved.

If you want to develop a dApp, you can engage a blockchain development company that provides smart contract services to develop the code. This will set the rules of the contract for all stakeholders, but the code will exist in a decentralized blockchain network.

DApps work on multiple platforms. They can run on a variety of smart contract platforms, which create a set of unique rules and have mobilized different technological alternatives. For example, one big issue of decentralization is the divide between using permissions (a set of access criteria for trusted partners) and investing in permissionless decentralized networks. The debate for this separation is ongoing, and there are advantages and disadvantages to both approaches.

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Smart contracts work best with quantifiable outcomes, making some businesses more compatible with the technology than others. Nonetheless, all businesses perform financial transactions, where they exchange goods or services for money. Payments and deliverables in commerce are typically precise and measurable. Users can benefit from having simplified dApps that help them process savings, sub-currencies, wills, hedge contracts, financial derivatives and employment contracts.   

Although online voting, digital identities and decentralized governance are primarily government concerns, that doesn’t mean that you can’t use dApps to transfer the processes to a business context. Any piece of information or data that can be shared across a decentralized blockchain network, meeting the rules set by smart contract service technology, can be used to improve your business, making it faster and more cost-effective.

An area with excellent potential for smart contracts is transportation and logistics. Measurable variables connected to freight shipping – such as size, volume, weight, delivery time, point of origin and point of destination – can be integrated into smart contract-based applications. Using tracking software and IoT sensor technology, all network partners have insight into what is happening to the product at any given time.    

Conclusion: Smart contract services are a relatively new technology. If you are considering jumping in early, explore the rules of the game before you take the first step. The novelty of dApps makes them full of potential, but also prone to risks. Evaluating the success of a dApp is not easy, but you can benefit from being a first mover. The process will be much easier if you adopt a transparent and careful approach right from the start.