If you have heard about cryptocurrency or blockchain, you have most likely heard of the term “decentralized” as well. To get a clear understanding of what decentralization is, you must first understand what a centralized network is. In a centralized network, all nodes or users of a given network will connect to a central server that ultimately oversees the network. In a decentralized model, all nodes are interconnected and communicate directly with each other to eliminate the need for one singular controller. Without a central server, there is no dominant force, which gives equal power to each person using the network. For this reason alone, decentralization is one of the reasons why blockchain and cryptocurrencies have grown in popularity.

Decentralization Explained

While a Bitcoin transaction may seem complicated, the process is actually quite quick and simple. The first step of a Bitcoin transaction begins when the person who wants to send Bitcoin inputs the address of the recipient and the amount they want to send into their wallet software. Then, the sender will input their private key (a special code that allows a Bitcoin transaction to be conducted) after they have verified that the recipient address and Bitcoin amount is correct. Once this has been accomplished, the transaction is included in the next block by a miner. After this, the transaction is verified by all of the nodes (users) in the network and the Bitcoin transaction will finally make its way to the user’s wallet, which typically only takes a matter of minutes.

Blockchain is taking the world by storm and for good reason! There are plenty of benefits that come with using the technology in place of other existing systems. Some of the major benefits that are associated with blockchain include the permanence and security of the data that is stored on the blockchain’s ledger, the anonymity and privacy maintained by users of a network with blockchain technology, the lack of a “middle man” due to the peer-to-peer nature of blockchain, the freedom provided by decentralization, the security that comes with distributing the blockchain across all users of the network, and the lower transaction fees that stem from using the efficient technology. Overall, it is quite easy to see why blockchain has managed to become so popular.

Those who are just now learning about blockchain will often ask themselves, is blockchain a viable solution to current technological issues found in several different industries? The truth about blockchain is that it is much faster than previous technologies and is more secure as well, providing an open, distributed ledger among the network using it. This ledger keeps track of all verified and legitimate transactions that have taken place between two parties on the network. Blockchain technology, which was initially applied to the Bitcoin project, has the potential to be used across many industries and to assist in the projects such as creating a database, tracking your supply train, or even distributing smart contracts.

Blockchain is a revolutionary piece of technology that has the ability to tackle many of the current issues we see in today’s world. Introduced in 2008, blockchain is the backbone of Bitcoin and allows for the recording of (legitimate and verifiable) transactions between two parties. Despite being used in cryptocurrency networks, however, blockchain has the potential to be used in a variety of different industries and has been adopted by several major companies such as Apple, Google, and Amazon. Whether it’s being used to create public identity systems or track the supply chain, blockchain will be able to replace older technologies and make it so that businesses can begin to run more efficiently.

The Truth About Blockchain