Decentralization in Cryptocurrency: What Does it Really Mean?

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What is decentralization

When we talk about the concept of decentralization we are talking about one of the core principle of cryptocurrency and blockchain the very idea of it is decentralization and the idea is to be completely different from what we know or common to us in the traditional system we have around us which is centralized, so blockchain offers us something different than the centralized system around us.

So when we talk about decentralization in cryptocurrency what we are talking about is a system where control is shared yes not resting on one body but shared amongst the various network users, there is no single entity having all the control but that is shared evenly among all the network users, no what does this mean?

To better understand we have to analyze what we have in the traditional setting, what we are used to from banks to government who often have absolute control and often make decisions impacting ours without caring for our views or opinions, they are in authority over our data's and finance and could easily use it as they seem fit if they feel there is need to without caring for our view, your bank could easily lock your account if they feel your activities are suspicious or restrict you before asking first in same way government make decisions that impact us and we don't have a say in it, yes that's what a central authority looks like.

Now thats not how it is in cryptocurrency or the idea of decentralization, cryptocurrency ensures that there is no central authority, no single entity having absolute control and no need of an intermediary which means it doesn't operate same way local banks do instead through nodes of computer networks transactions are validated and decision making affecting the network are shared or spread across the various persons using the network which means everyone's opinion is factored in to ensure any decision made is in the good of the general public very different from how our centralized government operate.

How Does Decentralization Work in Cryptocurrencies?

Well it's quiet simple, take for instance let's say Bitcoin the very first cryptocurrency and ofcourse we know the technology it's built on, yes it's built on blockchain and decentralized network which means when a transaction is initiated is has to be validated first and in the case of Bitcoin this validation goes through a consensus mechanism known as proof of work, now what's the purpose of this. Well in the very mind of decentralization is to ensure that every network user contributes to how the blockchain condition should be which could also be said about Ethereum operating on proof of stake just a similar kind of process.

Now what this all ensures is that there is no risk of manipulation which could be experienced if the blockchain is run by a centralized authority like most system in the traditional setting, when there is a single entity controlling everything it often leads to single point of failure and that would be damaging to all and that is not same here due to cryptocurrency decentralized nature seeing as is runned on blockchain technology which is a decentralized network and that right there ensures that censorship risk is not there neither is there much risk of fraud like commonly experienced in centralized system.

So cryptocurrency being decentralized and all means such risk is not here as decision making doesn't rest with one person or central authority further limiting any malicious individuals from lunching a successful hack.

Benefits of Decentralization in Cryptocurrency

• Transparency: This is a great benefits of decentralization in cryptocurrency, since everything is recorded and are on a visible public ledger is makes it's easy for users to truly believe the whole system and process since they can verify each transaction themselves, transparency gives blockchain or makes it a system that has integrity.

• Security: Also this is another benefits of cryptocurrency being decentralized and all because for an attempt to hack or for any attack to be successful then one needs to control a larger part of the network and that is controlling a whole lots of computer nodes that is beyond you it's almost impossible so this makes decentralization add to the security of cryptocurrency.

• Censorship Resistance: Users freely transact without fear of anyone of interference from third parties that's another benefit of decentralization in cryptocurrency.

Conclusion

Decentralization really makes cryptocurrency to be world apart from what we have traditionally and being decentralized places it at a great advantage and ensures it's more secured, transparent and censor resistance, indeed we might never see anything like blockchain technology and cryptocurrency again.