Decentralization is a term used to describe the process of distributing authority, control and/or responsibility away from central authorities or organizations. In the world of cryptocurrency, decentralization refers to the lack of a single centralized point governing transactions or storage of data. Instead, it relies on peer-to-peer networks for communication between users and computers around the world.
The concept behind decentralized systems is that no one entity has complete control over an asset but instead power is distributed among multiple entities in order to ensure fairness and reliability. This allows users to have more autonomy with their digital assets without relying solely on third parties such as banks or governments. Decentralized networks can be both public (open source) and private (closed source).
In terms of crypto currency, decentralization occurs when there are no gatekeepers controlling who participates in a network nor how they use it – meaning anyone can join freely without any permission needed from an administrator running some kind of server farm located elsewhere in the world. The most popular form this type takes today comes through blockchain technology which serves as an immutable ledger recording all past transactions securely stored across many different devices worldwide making theft virtually impossible due its vastness size complexity . It also eliminates counterparty risk since each transaction must be approved by consensus before being added permanently into system thus eliminating need trust counterparties participate trade safely securely .
By allowing participants equal access resources ability share , decentralized platforms create opportunity new kinds economic activity lead innovations industries never seen before like automated trades money transfers even voting decisions project funding allocation social causes initiatives . Furthermore because these systems rely purely mathematics algorithms opposed human judgement decisionmaking processes become much faster efficient compared traditional methods operation .