Anyone who tries to explain cryptocurrency, Bitcoin or blockchain technology will come up against the task of also explaining decentralisation. That is because all cryptocurrencies and the technologies involved are decentralised. Although, truly understanding what decentralisation is, has often been overlooked or simplified. Here we will dive deeper into the idea of decentralisation in the crypto world and other areas.
It’s a Centralised World
Most of the world runs through centralised operations. A nation will have a government, a high court and a central bank. All of these things are considered to be a central authority because their processes are controlled by one powerful entity. This is one of the big differences between the centralised and the decentralised.
This didn’t stop computer wizards and tech gurus coming up with ways to make technology decentralised. They have already made messaging decentralised and even learned how to untie file sharing from a central authority, but one of the hardest tasks was to decentralise payments. Thanks to cryptocurrency, blockchain technology and secure wallets like the Luno Bitcoin, this has now been made possible.
So, What Really Is Decentralisation?
Decentralisation from a broad perspective is enabling a process to work without the process being controlled by a single authority. Instead, the decentralisation of something allows it to be something somewhat owned by everyone. This is what has allowed Bitcoin and other cryptos to be traded and used without third party interference/handling – and without additional fees. Yet, decentralisation can be classified into three different types, as agreed by Vitalik Buterin:
1. Political Decentralisation
To work out if there is political (de)centralisation, you must ask how many individuals are controlling the computers within the system?
2. Architectural Decentralisation
Architectural (de)centralisation looks into the technology rather than the individuals. It asks how many computers are working within the system and how many computers could shut down and allow the system to go on as normal?
3. Logical Decentralisation
Is the data involved in a single structure or a swarm of data points? This can often be a harder question to answer and an easier way of approaching it is to ask if you cut the system in half, would each half be able to continue operating as two separate systems?
These three types are often missed and are what make simplistic definitions of decentralisation unattractive. Decentralisation may refer to each of these areas, which will need to be explained as separate units rather than in a two-line definition. Some people may find it hard to consider these three types as individual working parts of decentralisation, but in fact, they almost certainly are.
Another Example of Decentralised Structures
The blockchain as a decentralised technology has been well documented, but to understand decentralisation better, we can turn to language itself. The English spoken between two speakers does not need to agree with the sentences produced by two other English speakers. Yes, there are grammar rules, but no central authority is overseeing these rules and enforcing them. There are millions of speakers, millions of computers (brains), and any two speakers can communicate wherever they are.
Understanding decentralisation shouldn’t be viewed as an easy thing because it can mold to different situations – and that’s what makes it so interesting!