Decentralization is at the heart of the cryptocurrency ecosystem today. And because it serves as the canonical principle of the Blockchain; it is one of the concepts most used by those of us active in this revolutionary technology. Thousands of hours of research and billions of dollars in hashrate have already been devoted to implementing decentralized systems; both to protect this technology, as well as to improve it.
However, it is a concept whose definition remains unclear to the general public. As with all new terms, it can be used erroneously to promote some marketing angle. Put simply, it can be used to bamboozle the uninitiated; to convince a reader of the writer’s superior knowledge or to gain some other advantage, rather than try and explain exactly what this technological development is and why it matters.
To understand what a decentralized system is, it would first be best to put the idea into context. Consider the illustration below, which gives an idea of what decentralization is by contrasting it with centralization and distribution:
From this diagram, it can be understood that a centralized system consists of a single entity that controls and decides the mode of operation of an entire network of other entities. An example is the operating system of a company, where power is centralized in the position of CEO who gives direction with regard to the internal and external activity of that company.
For its part, a distributed system implies that several autonomous entities ensure and perpetuate, in a coherent way, the overall functioning of a network, without being decision-making bodies. A distributed system is, for example, the Internet, which is materialized by the connection of many independent computer systems, in different geographical locations, to share information and resources on a continuous basis.
But what distinguishes decentralization from these other two types of systems? It is neither a system controlled by a single entity, nor a system whose mode of operation is based on the conjunction of several parties.
Put simply, a decentralized system is one that does not concentrate control and decision-making power in the hands of a single party, but in several entities that are presumed to be independent of each other. For example, a democratic government system is decentralized because all decisions are not taken solely by the head of state. The executive, legislative and judicial powers are indeed divided between different autonomous entities. Moreover, certain powers are decentralized geographically, by region or by State.