Cryptocurrency And Decentralisation

Source

Wonderful day to everyone in this community. We've heard of crypto countless times in this community. Countless times we've also heard that cryptocurrency is decentralised. However, what does this mean and why is it important. Let's find out.

How is Cryptocurrency Decentralised?

In blockchain, decentralization refers to the transfer of control and decision making from a centralized entity( individual, organization or group) to a distributed network.
When one says a cryptocurrency is decentralized, it means that no single person or group has control instead all users collectively have control. Decentralized blockchains are immutable, which means that the data entered is irreversible. For cryptocurrency, transactions are permanently recorded and viewable to anyone.
The decentralization is dependent on how high the hash rate is and how many mining entities hash rate is distributed between. The higher the distribution among mining pools of large sizes, the more the network is decentralised and the less likely it is to be tampered with. Example: Bitcoin and Ethereum.

What role do crypto miners/validators play in decentralization?

The main job of miners is to edit/add new data to the Blockchain. These data are not just added randomly, in fact, they are scrutinized and verified before they are added. The validators act as gatekeepers ensuring that the transactions are valid, and the senders possess sufficient funds to complete the transaction.

In decentralization, miners maintain the network's security, validating transactions and also adding new blocks to the blockchain. Their main purpose is to contribute computational power to the network and compete to solve complex mathematical puzzles known as "proof- of - work" algorithms.

Validators by taking part in consensus processes agree to the validity and order of transactions ensuring that the blockchain ledger is consistent and clear. The work of these people must not be underestimated because it fosters trust among Blockchain users as they know the system is 100% reliable. It is also important to know that the network determines the number of validators the Blockchain network must have. With time, as new validators join the network, the old ones leave.

Why is decentralization important for cryptocurrencies?

Source

The main reason blockchains are decentralized is to avoid putting control in the hands of a few or country's central bank. The main aim is to take banks out of the equation and have true peer- to- peer transactions.

One of the main advantage of decentralized exchanges over centralized exchanges is the ability for users to keep control of their private keys in the sense that when they lose their private keys, they lose their exchange database/data.