Decentralization in Blockchain [All you need to know]

In this Blockchain tutorial, we are going to learn about the concept of Decentralization in Blockchain. Here we will also discuss some related topics on Decentralization using Blockchain. Here is the list of topics that we will cover.

• What is Decentralization
• Decentralization in Blockchain
• Does a blockchain have to be Becentralized
• What does decentralized mean in Blockchain
• Advantages of decentralization in Blockchain
• Disadvantages of decentralization in Blockchain
• Types of decentralization in Blockchain

What is Decentralization in Blockchain

Decentralization is a concept that has been around for a long time. And it is often used in various areas like government, strategy, management, etc. espacially in the United States of America.

The core idea of decentralized is to transfer control and authority throughout the users rather than having a single central entity in charge.

This model offers benefits in a variety of ways like increased productivity, faster decision-making, beer motivation, etc.

A decentralized system is a network in which nodes are not controlled by a single master node, but rather by a group of nodes.

This is similar to a paradigm in which each department in a corporation is in control of its database server, transferring power from the central server to the sub-departments, which handle their databases.

Read What is Blockchain

Does a blockchain have to be decentralized

It is possible to have a centralized or a decentralized blockchain. However, the terms decentralized and distributed should not be used interchangeably.

A blockchain is inherently distributed (meaning that multiple parties have copies of the data), but it is not inherently decentralized.

A blockchain can be of 2 types, permissionless or public blockchain and permission-based or private blockchain.

Now, public blockchains are decentralized in nature because each node in the network has a complete record of all data recorded on the blockchain. A common example of a decentralized blockchain is Bitcoin.

Whereas, private blockchains are centralized. Because, in this, a single entity manages the network size and also controls the level of access of nodes.

Decentralization should only be used where it makes sense. A blockchain application doesn’t need to be completely decentralized. Any blockchain solution must fulfill the user’s requirements, which may or may not include specific levels of decentralization.

Check out, Blockchain Architecture

What does decentralized mean in blockchain

As discussed above, a blockchain can be centralized as well as decentralized. Now, let’s have a clear view of what does decentralized means in the blockchain world.

In public or permissionless blockchains like Bitcoin, there is no central authority to manage the whole blockchain network. Moreover, the data of a blockchain is not stored at any central location.

So, in public blockchains, any person can become a part of the blockchain network. And the control and authority of the network are distributed among these participating nodes.

Now, a copy of the blockchain is spread across these nodes in the network. And whenever a new block is added into the blockchain, each node in the network has to updates its blockchain copy to reflect the change.

This implementation makes the public blockchains decentralized. Because all the data, control, and authority in the network are distributed among the users of that blockchain.

Read, Types Of Blockchain

Advantages of decentralization in blockchain

Now, in this section, we will discuss some of the key benefits of a decentralized blockchain. And the benefits are as follows.

• Trustless Environment: Due to decentralization in blockchain, no one needs to know or trust anyone in the network. Because each node in the network holds the same copy of the blockchain data. And if someone tries to tamper with that data then, it will be rejected by the majority of the nodes.
• Transparent: The decentralized blockchains are transparent as these blockchains are open to the public. Anyone with internet access can participate in the blockchain. And a same copy of data is maintained by each participating node.
• Full Control: With decentralization, the participants or users in the blockchain have full control over the operations. As there is no central authority, all the data, control, and authority of the blockchain are in hands of the users.
• Immutable: In a decentralized blockchain, the data stored in a blockchain is almost impossible to modify. This is because each modification needs to be verified by each node in the blockchain network.
• Secure: The decentralized blockchains are much more secure because they use cryptography to protect data. Additionally, the data in the current block requires data from the previous block to confirm the data using cryptography.

Read Consensus in Blockchain

Disadvantages of decentralization in blockchain

Now, in this section, we will discuss some of the main disadvantages of decentralization in a blockchain. The following are some of the disadvantages.

• Cost: Decentralization can be more expensive than centralization in an organization. Since it requires the implementation of systems and tools that automate communication.
• Conflict: Decentralization should only be used based upon the requirement of the users. Because if users do not maintain the decentralization properly, it can lead to conflicts.
• Volatility: The cryptocurrencies based upon decentralized blockchain are volatile in nature. This is because cryptocurrencies or even the whole technology is new in the market. Due to which many people are investing in them.
• Crime: In a decentralized blockchain, crime can be a major drawback. This is because everything is done anonymously on the network, which might lead to exploitation or misuse.

Also, read Methods of Decentralization in Blockchain

Types of decentralization in blockchain

Before understanding the types of decentralization in blockchain, we need to understand different levels of decentralization in general. And the levels of decentralization are discussed below.

• Fully Centralized: The system where there is a central authority to control and manage the whole system. For example, the financial system.
• Semi Decentralized: The system where there are multiple intermediaries to control and manage the complete system.
• Fully Decentralized: The system where there are no intermediaries to control or manage the system. For example, Bitcoin.

Now, as we got an idea about various levels of decentralization, it’s time to discuss different types of decentralization in BLockchain. So, there are mainly 3 types of decentralization in Blockchain which are as follows.

Architectural Decentralization: This type of decentralization deals with how many physical computers are running in the system. And how many of those computers can it handle failing at once.

So, the architectural decentralized blockchains are those where multiple systems run the same blockchain. Now, even if one computer fails, the blockchain will not be affected.

Bitcoin is one of the well-known examples of architectural decentralized blockchain.

Political Decentralization: This type of decentralization deals with how many individuals or organizations control or manages the computers in that system.

For example, Bitcoin is also politically decentralized as it is not controlled by an organization or person. All the participating nodes in the Bitcoin network run the Bitcoin protocol.

Logical Decentralization: This type of decentralization deals with how the system’s interface and data structures depict.

For example, Bitcoin is not logically decentralized as there is a single agreed-upon state, and the system functions as a single system.

One simple way to determine this is by cutting the whole system into 2 parts. And check whether both sides fully operate as independent units.

You may like the following blockchain tutorials:

• Decentralized Applications in Blockchain
• Introduction to Blockchain Wallet
• Cryptography in Blockchain
• Introduction to Flow Blockchain

So, in this tutorial, we learned about the concept of Decentralization in Blockchain. Here we have also discussed some related topics on Decentralization using Blockchain.

Here is the list of topics that we have covered.

• What is Decentralization
• Decentralization in Blockchain
• Does a blockchain have to be Becentralized
• What does decentralized mean in Blockchain
• Advantages of decentralization in Blockchain
• Disadvantages of decentralization in Blockchain
• Types of decentralization in Blockchain