{"id":41086,"date":"2021-10-07T09:52:00","date_gmt":"2021-10-07T07:52:00","guid":{"rendered":"https:\/\/crypto-economy.com\/?p=41086"},"modified":"2021-10-07T09:52:00","modified_gmt":"2021-10-07T07:52:00","slug":"decentralization-of-cryptocurrency","status":"publish","type":"post","link":"https:\/\/crypto-economy.com\/decentralization-of-cryptocurrency\/","title":{"rendered":"How Decentralization Works in the Cryptocurrency World"},"content":{"rendered":"
One of the greatest things about the development of the internet is its power to decentralize<\/em> services that were once centralized. Information used to be centralized and accessible only by a privileged few. Now, everyone can access almost all the information in the world online.<\/p>\n <\/p>\n The publishing of information used to be controlled by a few media companies. Now, with the internet, anyone can publish anything online, without being censored.<\/p>\n This decentralized transformation is happening in finance, too. The technology has now been developed and perfected, and we\u2019re on our way from a centralized financial system, run by banks, to a decentralized system run by everyone in the world.<\/p>\n Blockchain is the most important decentralization technology developed for the internet. It is a protocol that allows internet users to communicate private information and trade valuable digital assets without the need for a third party such as a bank.<\/p>\n It\u2019s implemented using computer algorithms and clever cryptography. Information is stored in a public ledger and grouped into blocks that are chained together using cryptography. This is where it gets the name \u2018blockchain\u2019.<\/p>\n Centralization is when something is controlled by a single authority. For example, the US dollar is a centralized currency, because it is completely controlled by the US government. Facebook is a centralized social network because the network is controlled by the Facebook company.<\/p>\n Most products and services in our current market are centralized. The advantage of a centralized system is that it can be run efficiently. Facebook is an extremely fast and scalable social network because it\u2019s controlled by one party. The disadvantage is that the central authority has total control, and you users have to trust them. Do you trust Facebook with your data?<\/p>\n Decentralization means the activity of an organization is not controlled by a central authority but by a distributed group of people. For example, there is no central \u201cBitcoin\u201d organization with a CEO that can make decisions. Instead, decisions are made by all the people that run the Bitcoin network.<\/p>\n These networks can be less efficient (it\u2019s very difficult to change the core Bitcoin code), but you don\u2019t need to worry about anyone taking your bitcoin, or Mark Zuckerberg selling your account information.<\/p>\n Decentralized applications are now being tested for all sorts of use cases, from cryptocurrencies to social networks.<\/p>\n Governments have control of the major currencies in the world today. The US government has control of the US dollar, the EU has control over the euro, and so on.<\/p>\n The currencies are stored and distributed by financial institutions in these countries, known as the banks. When you use these government-issued currencies, you are implicitly putting your trust in the governments and financial institutions.<\/p>\n When the 2008 global financial crisis hit, many people realized that their trust in these institutions had been misplaced. Bankers got greedy, took on too much risk, and ended up crashing the economy. The governments, in an attempt to save the economy, printed enormous amounts of money to save the banks.<\/p>\n A recession soon followed, and all the money printing led to inflation, causing much of regular people\u2019s savings to disappear. Meanwhile, the bankers who caused the problem went home with the bailout money and became richer than ever.<\/p>\n This situation was the background for the launch of the Bitcoin whitepaper<\/a> in 2008. It was a decentralized currency that couldn\u2019t be printed by any government and wasn\u2019t controlled by any bank. It was immune to hyperinflation, inherently secure, and it couldn\u2019t be seized by any government.<\/p>\n People saw this as an opportunity for a more stable and decentralized future in finance.<\/p>\n Here\u2019s a quick overview of the top decentralized cryptocurrencies.<\/p>\n Bitcoin is the original cryptocurrency, made decentralized by its Proof-of-Work algorithm. It\u2019s not the most efficient cryptocurrency to use, with transactions sometimes costing a few dollars and taking up to 10 minutes \u2013 but it\u2019s known as the digital gold of the crypto world.<\/p>\nWhat is Blockchain Decentralization?<\/h2>\n
What is the Difference Between Centralization and Decentralization?<\/h2>\n
Why is Decentralization Needed in Cryptocurrency?<\/h2>\n
Most Popular Decentralized Cryptocurrencies<\/h2>\n
Bitcoin<\/h3>\n
Ethereum<\/h3>\n