A-Z: What is Centralization and Decentralization?

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Blockchain A – Z covers all of the important topics you need to know if you’re just getting into blockchain! We go letter by letter with each episode defining a specific topic. By the end of the series, you’ll know your blockchain ABCs!

Centralization and Decentralization:

Centralization is the concentration of control of an activity or organization under a single authority. As a matter of fact, a synonym for centralization is control. Over time we’ve given power to governments and banks, and many argue that those institution have overstepped their bounds.

On the other hand, decentralization is the action of creating systems that do not rely on rent seeking third parties. It distributes control and information throughout various places, people, or powers. Therefore, it does not reside in a single authority, but multiple or many. This offers many benefits for individuals and accountability.

In terms of blockchain technology, which is decentralized, it requires information to pass through multiple points, rather than a single one. Information and data is also stored in multiple points, offering greater security than centralized hubs of data.

You can read more about the benefits of decentralization, and the differences between centralization and decentralization here.

For more blockchain terminology and vocab, head over to our Blockchain Glossaries, where we have a wide range of terms you should definitely know!
Still aren’t sure? Have a question about centralization and decentralization? Check out our full guide on the concepts here, or let us know here!