One of the fastest growing technologies, blockchain is poised to grow by more than 85% CAGR by 2030 from 2022. If market stats are to be believed, the revolutionary technology is predicted to touch $1431 billion within the coming 7-8 years. One of the many reasons why blockchain is considered to be a mighty force is its decentralized aspect. Blockchain is essentially a virtual that is shared, public, and is developed upon a decentralized framework. Read more about how bitcoin investments may yield a higher return on investments.
So, what is meant by the term “decentralization” and how does it make blockchain a revolutionary force?
Decentralization in Blockchain
Technically speaking, decentralization refers to a condition that is devoid of administration by a centralized authority. When it comes to blockchain, the entire network does not operate under the control of a centralized institution- rather the blockchain platform rests upon a diverse dispersed network.
The dispersed network comprises multiple computers that are termed as “nodes” in blockchain jargon. All these nodes together shoulder the administration as well as decision-making process of the blockchain. Every activity that takes place in a blockchain network, say addition of new blocks, only happens when there is a unanimous consensus across the entire network of nodes.
A decentralized network makes way for the creation of a complete “trustless” system since nobody has to trust anyone in the network. It’s because, given the decentralized nature of the network, every single data information regarding the blockchain network is visible to every node.
How is blockchain decentralization revolutionizing the world?
Put simply, the decentralization aspect of the blockchain shows the way to establish a fair and even world, especially in regard to the finance sector.
Elimination of unnecessary centralized monopoly
A network dominated by centralized authority tends to bring in an unnecessary monopoly over time, leading to corruption and red tape. It’s the same thing that we see in the traditional finance world where the centralized authorities hold the ultimate power over finance services and fiat money. As a result, these centralized forces have the upper hand to cause inflation and deflation as per their own specific interests, without considering the needs and plight of others.
A decentralized environment prohibits such corruptive activities of centralized forces by creating a democratic environment where every single person would have equal rights and facilities.
Revolutionizing the finance world
The traditional finance world operates under the centralized authority of banks that dictate the terms of service, according to their own vested interests. As a result, the conventional payment system always involves processing by middlemen that not only makes the process time-consuming but also expensive with high intermediary fees. A lot of people who are financially lean are thus unable to access these traditional banking services given lack of money. There is a huge share of unbanked populace till this date not just in 3rd world countries- but in 1st world countries as well.
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A decentralized structure eliminates the involvement of middlemen by making the whole transaction process even and fair for all, regardless of one’s financial status. When it comes to a decentralized network, payment is processed in a direct P2P approach. Given the absence of intermediary, as you find in centralized systems, transactions on decentralized networks are always way quicker and more affordable. This makes way for easy access to money transfers in especially those countries or for those people who are unable to access traditional money transfer systems due to the exorbitant fees.
As the decentralization infrastructure helps to establish a trustless system, it makes way for a transparent environment of operation, free of miscommunication or misleading communication. In other words, decentralized infrastructure holds the baton for a more transparent, faster, more affordable, more democratic, and more efficient world.