Decentralization | A Short Guide.

What is Decentralization?

Decentralization is the transfer of control of an activity or organization to several local offices or authorities rather than one single one. In a blockchain, decentralization refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network. By decentralizing the management of and access to resources in an application, greater and fairer service can be achieved.

Let us simplify this further:

When a system is controlled by a single entity (organization, group, or individual), it is said to be centralized, whereas when it is run by all the participants of the system itself, it is called decentralized.

For example:
Suppose a company owns a server comprised of 10,000 computers with a database holding all of its client's account information. This company has a warehouse containing all of these computers under one roof and has full control of each of these computers and all the information contained within them. Similarly, blockchain consists of thousands of computers, but each computer or group of computers that hold this blockchain is in a different geographic location and they are all operated by separate individuals or groups of people, i.e. a decentralized system is collectively maintained by a distributed network of computers. Each computer (or device) that joins the network is referred to as a node.

In simple terms, a node is any physical device that is connected to a network and that is able to send, receive and forward information.

Hence, a system is decentralized if its participants are able to connect either directly (peer-to-peer) or through a network of nodes that are not centrally managed, i.e. there is no third-party/middleman/higher authority controlling them.

How is security guaranteed by Decentralization?

Each node has a full record of the data that has been stored on the blockchain since its inception. If one node has an error in its data it can use the thousands of other nodes as a reference point to correct itself. This way, no one node within the network can alter information held within it. Because of this, the history of transactions in each block that make up the blockchain is irreversible.

If one user tampers with the blockchain’s record of transactions, all other nodes would cross-reference each other and easily pinpoint the node with the incorrect information. This system helps to establish an exact and transparent order of events. That being so, to succeed an attacker would have to hack a large number of nodes (databases/places) on the network. It is fair enough to say that, this is virtually impossible, especially since the number of blockchain users is increasing day after another, and so is their data.

The transparency of Decentralization:

Because of the decentralized nature of blockchain, all transactions can be transparently viewed by either having a personal node or by using Blockchain Explorers that allow anyone to see transactions occurring live. Each node has its own copy of the chain that gets updated as fresh blocks are confirmed and added. This means that if you wanted to, you could track blockchain and its flow wherever it goes.

Difference between Centralized and Decentralized networks:

Decentralized networks are made up of computers, also known as nodes that interact on a direct, user-to-user basis, without the need for third parties. Centralized networks have computers, managed at a single place, which store the data, but the users cannot directly access this data, even if it is theirs.
Within a decentralized network, information is distributed to every single “node” on the network. Each node has an updated copy of all recorded data. In centralized networks, a particular set of computers can be used to store a specific type of data, i.e. there can be different types of data stored on different groups of computers. A centralized network does not guarantee that all the data in each computer is the same, as it can be easily changed by the central authority controlling it.
In a decentralized network, each participating node is independent of the others. In a centralized network, computers can be dependent on each other, as there might be groups of computers assigned to store a particular type of data. So, to get different types of data, computers will have to ‘ask’ from the computers that have them.
Rather than following the instructions of a central authority, decentralized nodes connect using common rules, at the same time maintaining their sovereignty and managing their own privacy. This helps keep the network secure, while also ensuring relatively democratic governance.
In a centralized network, a corrupt entity may enter wrong data and edit, delete or tamper with it. Whereas in a decentralized network, if a node tries to tamper with data, there are thousands of nodes with correct data working around the world to catch the dishonesty.

Benefits of decentralization.

Provides a trustless environment:
In a decentralized blockchain network, there is no issue of trust being betrayed. Each member in the network has a copy of the exact same data in the form of a distributed ledger. If a member’s record is altered or corrupted in any way, it will be rejected by the majority of the members in the network having correct records.
Improves data reconciliation:
Companies often exchange data with their partners. This data, in turn, is typically transformed and stored in each party’s data silos, only to resurface when it needs to be passed downstream. Each time the data is transformed, it opens up opportunities for data loss or incorrect data to enter the workstream. By having a decentralized data store, every entity has access to a real-time, shared view of the data.
Reduces points of weakness:
Decentralization can reduce points of weakness in systems where there may be too much reliance on specific factors. These weak points could lead to systemic failures, including failure to provide promised services or inefficient service due to the exhaustion of resources, periodic outages, bottlenecks, lack of sufficient incentives for good service, or corruption in a centralized framework of computers.
Optimizes resource distribution:
Decentralization can also help optimize the distribution of resources so that promised services are provided with better performance and consistency, as well as a reduced likelihood of catastrophic failure. The biggest advantage is, if a central database where all of the data is stored faces an issue, there will be no way to access the database except when the issue is solved, and neither can new data be added in that time interval. But, in a decentralized network, even if a whole city faces issues with accessing the data, the data will still be entered and updated in the system from nodes all over the world. And this data will reflect into that city’s nodes as soon as the issue is resolved.
Data stored in a decentralized network is considered incorruptible:
Every node in a decentralized system has a copy of the blockchain. Data quality is maintained by massive database replication and computational trust. No centralized "official" copy exists and no user is "trusted" more than any other. Transactions are broadcast to the network using software. Mining nodes validate transactions, add them to the block they are building, and then broadcast the completed block to other nodes.

Conclusion.

Peer-to-peer decentralized networks can facilitate more meaningful, direct human interactions, maintained by their participants according to an open agreement and without the need for costly intermediaries (third parties or central authorities).

References: