Blockchain Decentralization

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Decentralization

Decentralization is an essential component of a blockchain network. But what exactly does it mean? Let’s use a common example.

Consider a bank that stores customer data in the cloud or network server. While these systems are generally secure, they are also prone to intrusion from malicious actors. Why?

Banks operate on highly centralized servers, which creates a single point of failure. A security breach would likely expose all customers’ details.

With blockchain protocols, this is not the case. The computer networks handle the processing and storage of users’ data and are dispersed across multiple locations. This makes them decentralized, as each network has a digital copy of the blockchain transactions. This undermines the systemic structure’s centralization while increasing redundancy.

Transparency

Centralized financial transactions are mostly carried out behind the scenes. As a result, current conventional financial practices are more opaque and less trustworthy.

Blockchain alters this narrative as it is completely transparent. This is accomplished by utilizing blockchain explorers. Blockchain explorers enable users of that network or anyone else to view real-time transactions completed on the selected protocol, implying that they are publicly viewable.

However, this does not imply that blockchain protocols are unconcerned about safeguarding users’ identities. The Bitcoin blockchain, for instance, identifies users by their wallet address, not by their personal identity, implying that the blockchain promotes anonymity while ensuring transparency.