Levels of decentralization

The past centuries human kind has been very busy centralizing structures in our society. Political regions have grown from regions to states to united states. Organizations grew from individual craftsmen to multinationals.

With the coming of the Internet, a reverse of this trend has started. In a matter of decades it became possible to have peer-to-peer relations not bound by physical location.

When thinking about this, please keep the following picture in mind:

There are roughly three stages of centralization:

  1. centralized
  2. decentralized
  3. distributed

Blockchain technology is a distributed technology.

With the blockchain technology payments can be made directly to another person, without a third party (as a bank). This creates a peer-to-peer network for payments, a distributed payments network.

The blockchain on the other hand is decentralized, which means that the blockchain (the same data) is available on multiple nodes. The advantages are:

  • no single point of failure
  • safe from attacks
  • easy to join the network
  • no one has full control