In blockchain, decentralization refers to the process of shifting control and decision-making from a single, central entity (such as an organization or individual) to a distributed network of participants. The goal of decentralization is to reduce the need for trust among participants and to prevent any single entity from exerting control over the network, which could harm its functionality.
Decentralization isn't a new idea. When designing a system, three main types of network architectures are typically considered:
Centralized: Control is held by a single authority.
Distributed: Control is shared across multiple nodes, but there may still be some central authority.
Decentralized: Control is spread across the network with no single point of authority.
In the context of blockchain, while the technology often relies on decentralized networks, a blockchain system cannot be strictly labeled as "decentralized" or "not decentralized." Instead, decentralization exists on a spectrum and can be applied in varying degrees to different aspects of a blockchain system. By decentralizing the management and access to resources within a blockchain application, a more equitable and resilient service can be achieved.
However, decentralization comes with tradeoffs, such as lower transaction throughput (slower processing of transactions). Ultimately, the level of decentralization chosen for a blockchain system should strike the right balance between performance and trustlessness.
