How Decentralization Works In The World Of Cryptocurrencies

Cryptocurrencies are a fairly new phenomenon and have piqued the interest of many people in the past few years. If you even have a passing interest in crypto then you’ve likely heard of decentralization and wondered what it meant or at least what effect it has in the context that it’s mentioned.

Perhaps you’ve been following altcoin news and were wondering what decentralization would mean for you if you got deeper into the world of cryptocurrencies. We’ll cover how it works and what it means for you as a potential crypto user in this text and hope that it will clear up any confusion you may have had prior to reading it.

What is decentralization

Decentralization in this context means that there is no third-party such as a bank governing your money. This means that it is completely in your control. Very many people prefer this as they understandably want full control over their own hard-earned cash, but there is a bit of a downside when removing the third party.

If you get scammed or for whatever reason lose the funds in your account due to some mistake, then the bank will usually assume liability and help you get the money back in some way. While it can hurt to lose this upside, it’s generally a good trade for the self-governing aspect if you just end up being a bit more careful to offset it.

How does decentralization work?

Decentralization works by transferring the control from something centralized, such as a bank, to a network of users. This means that the level of trust each user needs to give each other is minimal due to the network itself working via majority. Due to this, it’s very difficult for someone to have control over other users in said network.

This in combination with the rest of the systems and features crypto employs creates a far more secure experience for the end-user. While you may not be able to get your money back if something goes wildly wrong like with the bank, the chances of something like that happening are reduced at the same time which certainly does help with the issue.

What else does decentralization mean for users?

While the main benefit of decentralization is the fact that you are in full control over your money unlike with banks, that isn’t the only benefit of it. For example, decentralization reduces weak points as there are fewer moving parts in the payments system. Simple systems are often far more secure due to fewer places where errors can occur.

Another thing to consider is the fact that there is less data loss due to it being passed around fewer times. This can reduce errors as well and lower the costs of keeping the system running. This better data distribution can allow for any services provided to happen faster and more consistently leading to a better user experience.

All of these come together to provide a far better experience when using them, but also anonymity as you don’t need to give personal info for the blockchain. You can anonymously conduct transactions which means that private info leaks on certain sites barely affect you.

Conclusion

Decentralization is possibly the most important aspect of cryptocurrencies, at least for many people, and its benefits of it are impossible to ignore. If you were on the fence about joining the crypto community then these perks should help you hopefully make an easier decision.

If you do end up joining and making use of a decentralized system we’ll be very happy that we have been able to help you. Take care and good luck with any crypto endeavors.