What does decentralized even mean?

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Decentralization is one of the most popular buzzwords of the 21st century. In many cases, it’s used interchangeably with terms like ‘distributed,’ ‘deconstructed,’ and ‘democratized.’ But what does decentralized even mean? 

A decentralized organization is one in which decision-making power and resources are distributed among many autonomous actors. That can be intentional or unintentional. The internet has accelerated the rate of decentralization in society by breaking national borders. Of course, some people hate centralization, but there are some downsides too!

In a decentralized organization, decision-making is distributed among many autonomous actors.

In a decentralized organization, decision-making is distributed among many autonomous actors. Autonomous actors are the decision-makers who make decisions by consensus.

Decision-making is not centralized, which means there isn’t one person or group of people making all the decisions for the entire organization. Instead, power is distributed throughout this network of autonomous actors. As a result, each actor has an equal say in what happens within their sphere of influence.

Decentralization can be intentional or unintentional.

Decentralization can be intentional or unintentional. Intentional decentralization is a conscious decision to distribute power among multiple parties. Unintentional decentralization is a side effect of a system designed for centralization but has evolved into something more decentralized.

Examples of intentional decentralization include:

* the United States government

* the internet 

* blockchain technology. 

A good example of unintentional decentralization is what happened with the internet during its early years. It was initially designed for military use but became widely available due to its low cost and ease of use (and because it was too expensive to keep track of all who used it).

The internet has accelerated the rate of decentralization in society.

The internet has accelerated the rate of decentralization in society. It’s made it easier for people to connect, build new things, share their ideas and thoughts, organize and collaborate. All of which can lead to more decentralized systems.

Decentralization can cause a lack of coordination and a lack of accountability.

One of the most apparent problems with decentralization is its potential to cause a lack of coordination. When there aren’t any central authorities, it can be challenging for everyone involved to figure out if they’re doing things the same way. In an extreme case, this can lead to groups attempting different strategies simultaneously. Each group thinks its approach is best instead of having all members coordinate so they can work together on a single strategy.

Another issue with decentralization is its tendency toward lack of accountability. As no leaders or bosses are overseeing your actions, you might feel less pressure than usual about whether what you’re doing is good enough. You might also have trouble motivating yourself when there aren’t any external incentives for doing a good job (like getting paid more). 

That lack of accountability may make people feel less motivated and less confident when trying something new or unfamiliar. They don’t know how well they’ll do without anyone else providing feedback on whether or not their efforts are sufficient. But sometimes, this kind of uncertainty can lead us down unexpected paths!

Some people hate centralization.

To these people, decentralization is the solution to many of these problems. Without a single point of failure, decentralized systems are more resilient and can withstand attacks better than centralized ones. 

They also allow for competition and innovation because no company controls its direction. In theory, this sounds great! But there are some drawbacks too:

  • Centralized systems have faster transaction speeds than decentralized ones do. They don’t have as many steps involved in confirming transactions (which are handled by miners in traditional blockchains).
  • Decentralized systems like Bitcoin rely on trustless consensus protocols instead of trusting any one entity or organization with your money. However, this means you must trust all the other participants who participate in the network voluntarily without coercion from anyone else. That isn’t always realistic, given human nature (see our article on trustless vs. trustworthy).

Centralized systems are more efficient than decentralized systems.

The difference between centralized and decentralized systems is that the former relies on a single authority to control information, decisions, or other processes. In contrast, a decentralized system disperses its control over various parts of an organization or community.

An excellent example of a centralized system would be an online marketplace like Amazon or Etsy. These sites are hosted by one company, and all transactions go through them. They are also responsible for security measures (like banning users who violate their policies). 

It makes it easier to implement changes that benefit everyone using these platforms—like new features or bug fixes—since there’s only one person with the final say-so on what happens with them. 

On the other hand, if something goes wrong with your home electricity supply, you need to contact someone at your local power company. There isn’t any way around this unless you’re willing/able to do it yourself!

There’s such a thing as too much decentralization.

While decentralization can be a good thing, it also has its downsides. For example, in some situations, decentralization can lead to inefficiency because each person does their own thing without coordinating with anyone else. It also makes it more difficult for people to communicate and share information about how they’re doing things. And who’s responsible if something goes wrong?

Moreover, when there are no clear leaders or decision-makers at the top of an organizational structure (like a boss), people may not feel accountable when they don’t follow through on their responsibilities. Without accountability, workers will likely slack off and not do their jobs well or diligently complete tasks that need to get done!

Decentralized organizations sometimes work better than centralized ones because they’re more flexible. However, there are tradeoffs involved in being decentralized as well:

Conclusion

Decentralized systems are increasingly common and seem to be here to stay. But we need to understand what decentralization means and be careful about its effects on society.


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