🔄 What Is Decentralization?
Decentralization involves spreading power, control, and decision-making throughout a network or system, rather than concentrating it in a single organization or individual. Instead of one entity holding all the decision-making authority, decentralization distributes responsibility and authority among multiple participants.
In centralized systems, a central authority or organization typically wields complete control. This central entity makes crucial decisions and has the authority to enforce rules.
🌐 On the flip side, decentralization seeks to share decision-making power and control across a wider network of participants. Technologies like blockchain play a role in achieving this, where multiple computers (nodes) uphold a shared database and validate transactions. Each node possesses a complete copy of the database, preventing any single entity from having total control.
Decentralization finds application in diverse fields and industries. For instance, cryptocurrencies and decentralized finance (DeFi) strive to establish financial systems independent of traditional banks. Similarly, decentralized governance models, like decentralized autonomous organizations (DAOs), empower communities to collectively make decisions without being dominated by a central authority.