Typically associated with the Ethereum project, a decentralized application, or DApp is an application that runs on a peer-to-peer network of computers as opposed to a single computer. The key benefit of this is, users of the network do not depend on a central computer in-order to send and receive information.

In-order to fully understand the difference between a decentralized application and a centralized application, let us consider some examples of centralized applications such as: Facebook, Twitter and YouTube. These are all examples of centralized applications, because in-order to use them, the user is dependent on a network owned and operated by a central entity. This is in contrast with a decentralized application, where the user is not dependent on a central entity to send and receive information.

Even though a DApp does not necessarily require a blockchain from which to operate on top of, most DApps harnesses the power of blockchain technology using what is known as, smart contracts. Smart contracts are self-executing contracts designed to enforce the terms of an agreement. For example, if you want to purchase a house, this process would involve multiple third parties such as estate agents and lawyers, who would settle the purchase for you. However, with the use of a smart contract, the process need only involves the buyer and the seller. Once all the conditions are met, the smart contract would execute independently of any third party.