Decentralisation in the crypto space refers to the distribution of control and decision-making power away from a central authority or entity. In the context of cryptocurrencies and blockchain technology:
- No Central Authority: Instead of a single entity (like a bank or government) controlling the currency or network, the system is managed by its users collectively.
- Distributed Network: The blockchain, where all transactions are recorded, is maintained across a network of many computers (nodes) worldwide. Each node has a copy of the ledger, ensuring no single point of failure or control.
- Consensus Mechanisms: Decisions, like adding new transactions to the blockchain, are made through consensus methods where participants (often referred to as miners or validators) agree on the validity of transactions. Common methods include Proof of Work (PoW) or Proof of Stake (PoS).
- User Empowerment: Users have greater control over their funds and data since they don’t rely on intermediaries. Transactions are directly peer-to-peer.
- Transparency and Immutability: All participants can view the entire transaction history, and once data is recorded, it’s extremely difficult to alter, enhancing security and trust.