Ever wonder what decentralized or decentralization even means? Do you find the topic too complicated to understand? It's really not that complicated, however, it's a revolutionary technology and here is why.

What is a centralized system

Historically, when it came to technology & data, there only used to be one option. A centralized system. What does that even mean? A centralized system basically is a system that runs on a controlled set of computers. This way the computing power, operating systems, and all data can be kept completely hidden. In terms of data, this means that the companies utilizing this data are the sole proprietors (owners) of it. What does this mean for you? All of the searches you perform on Google, Facebook, YouTube, all the content on Twitter, Instagram, & most of the internet links back to two major companies that offer data centers. These companies are: Google and Amazon.

This gives these two companies a vast amount of power when it comes to your data. That's because it's all stored on their devices. Therefore, if their servers turn off one day, it would lead to the total loss of data.

The decentralized system explained

What are it's advantages / disadvantages?

Unlike traditional computing, when it comes to proper blockchain applications, most of the crucial data remains stored on the 'blockchain'. But what does that mean? Essentially, on a traditional server, the data storage occurs in one central database controlled by a single company. On a decentralized system, an everyday joe can 'lend out' the computing power of their device in exchange for monetary incentive (called a transaction fee). The aforementioned process commonly referred to as Mining and is a quintessential process to crypto. The **idea of decentralization **is to give data & power back to **people **by storing it on an international group of computers.

Advantages of Decentralization

Using a decentralized system can lead to numerous advantages. For instance, a decentralized system allows for a programmer to store data in a very public way. This can be a very useful feature when it comes to the movement of money (complete transparency). Another major advantage of using a decentralized system is the ability to process transactions nearly instantaneously. This allows for the global transfer of data into a uncontrollable system. Another advantage is that the data stored remains permanently and is unmodifiable. Unlike a traditional centralized system, the data and the processing of the data is all controlled by a decentralized process. Powered by smart-contracts, programmers are now able to make whatever they desire at a cheap cost such as a DAO, allowing the community to gain totalitarian control over a project.

Disadvantages of Decentralization

The aforementioned point can also play as a disadvantage, though there are many more disadvantages to decentralization, we only mention the core points. Decentralization is some of the safest technology available to date. However, the immutability (difficulty to change records of data) of the technology makes it difficult to use for some applications. Data is immutable (is unchangeable/ removable) from the blockchain (therefore if unsafely used and/or modern programing practices (such as encryption) become unsafe, can lead to your data being compromised). Transactions can be expensive (depending on the size and use-case of the network, miners need to earn a reward for processing all these transactions. Therefore a reward has been laid out to these miners for processing the data. As such, the cost per transaction is always considered to be expensive. Finally, the last disadvantage of decentralization to-date, is the lack of scalability (difficult to grow).

Two most famous types of decentralized protocols

A protocol is a set of rules that a computer follows, it is essential in the world of computing and programing. As such, most of the internet and applications we use today follow some kind of protocol. For example, as you are visiting this website, prior to the entire link, you have the words 'https' this stands for hyper-text transfer protocol. One of the major protocols used throughout the internet to ensure security on the loading of a website. Similarly, in blockchain, there are two major protocols that most blockchains follow.

In Blockchain the major two protocols are Proof of Work (PoW) and Proof of Stake (PoS). Essentially PoW relies heavily on processing power competing to determine the future of the blockchain. In a PoS system, it relies heavily on how much money you have invested. You can then use this money to stake it which directly translates to how much power you have over the network. The most famous PoW blockchain in the world is Bitcoin, and the most famous PoS blockchain globally is Ethereum. If you're interested in finding out more about Proof of Work and Proof of Stake or cryptocurrency mining in general, feel free to read the linked article.