Crypto Academy Contest / S1W3 – Blockchain through the concepts by @preshymukel

Introduction: Blockchain

The blockchain system is a digital ledger where digital transactions are distributed and stored electronically. In the blockchain technology each participant has their own exact copy of the distributed ledger.
The importance of Blockchains are best in the Crypto world as they play a very vital role in maintaining a decentralized and secured system.

Data recoded on a Blockchain are stored in a way that’s difficult and impossible to be altered, transformed, deleted or hacked. The blockchain system is a one that can’t be cheated.
Blockchain secures stored data and guarantees that every stored data is protected from a third party. That is the data on a blockchain is kept away from centralized system i.e authorities or a group of persons.

My favorite concept or term related to blockchain

The blockchain technology encompasses many concepts. Blockchain was able to gain popularity in this digital age because of the different great concepts/features it offers. These concepts consist of their different functions and operations which collectively makes the blockchain system a secured and reliable system.
My favorite concept is the Decentralized Concept

Source

Decentralization in Blockchain is the dissemination of power evenly regarding decision making and planning of the blockchain to every user connected to the blockchain system with the sole aim of eliminating misjudgment or bias. Decentralization gives room for every user of the blockchain to be involved in decision making, thereby terminating third parties or centralized authorities.

The blockchain system is able to achieve decentralization in several ways;
Firstly; when new blocks are created, different network nodes verify the authenticity of the block before it can be added to the blockchain, this means that a block cannot be added to the blockchain by a single node.
New block after going through the verification process are stored chronologically, meaning they are added to the last block of the blockchain and after the addition of a new block it is next to impossible to reverse or change the data of that block. The only way the data of a block can be altered is when a majority of the network reach an agreement to do so, this means that for a successful hacking of a block, the hacker would require control of at least 51% of the network nodes which is almost impossible. This function of the decentralization concept is a step to strengthening the security of blockchains.

Advantages if Decentralization

• Distribution of authority and decision making: Decentralization on blockchain ensures that the governance of the blockchain is distributed among all the networks nodes and not controlled by an individual or a group of persons, and this erase bias on the blockchain.
  Decentralization in blockchain also ensures that transactions are not controlled by anybody, only the sender and the recipient of the transactions gets to know about the transaction but still the identity of the sender is anonymous to the recipient and vise versa.

• Security: Decentralization enhances the security of blockchain by encrypting of blockchain transactions. Decentralization ensures that all users assets are solely secured as no third party is in control of the user’s assets. Every user has a sole responsibility of controlling their assets and doing with it anything they wish at any point in time without any form of restrictions. Decentralization on blockchain also ensures that users transaction histories are kept away from the public.

• Offers a trust-less environment: A decentralized blockchain system is a system where no user has to trust the other, the reason is because every user on the blockchain gets an exact same copy of data which is distributed across every user in form of distributed ledger. In a case where a particular user’s ledger is altered, that node gets rejected by the network’s majority nodes.

• Fast transactions rate: Decentralization on blockchain has helped in cutting off a whole lot of intermediaries thereby speeding up the success rate of transactions on the system.

• Increase in Financial Efficiency: In decentralized blockchains, transactions are made directly from the sender to the recipient without the involvement of a third party, this is known as the Peer-to-Peer method of transaction. This feature offered by the decentralized blockchain has really improved people’s ability to control their finances and achieve financial goals/freedom without the interference of any third party.

Limitations of Decentralization

• High Volatility rate: The major limitation of decentralization on blockchain is the fact that cryptocurrencies that uses decentralized blockchains are highly volatile. The prices of cryptocurrencies are unpredictable, one minute they’re high and the other minute they’ve dropped drastically. This volatile nature of cryptocurrencies could be as a result of the decentralized system, the fact that no authority or governing body can take decisions on a fixed price/rate of cryptocurrencies. This high volatile nature of cryptocurrencies cause losses to so many users thereby leading many to depression.

• Crime History: Since decentralized blockchain transactions are anonymous in nature, hackers prefer these blockchains transactions for their criminal activities. This is a major reason why some countries have banned the trading of cryptocurrencies and this is thereby limiting the the wide use of the decentralized blockchain technology.

• It limits non-tech investors: Decentralized blockchains are digital platforms and their operations are strictly digital and not user friendly, this limits investors who are not conversant with technology from getting involved.

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Why do you think it is important in the blockchain?

When talking about blockchain and cryptocurrencies, it is often mentioned that they are decentralized in nature and the question that always follows is; why is decentralization important and beneficial to blockchain technology and cryptocurrencies. In this section we’ll be taking a look at why decentralization is important to blockchain and how it has benefited the blockchain technology.

Decentralization has place a wide range of importance on blockchain such as;
Decentralization helps blockchain to determine the validity of data before it can be added to the blockchain. There’s no single point of entry and failure in decentralized systems because different network nodes get involved in the verification of data before it they are added to the blockchain and if any need arises for any data transformation, all the network nodes have to reach a consensus. This is important in blockchain because it helps blockchains become next to impossible to be hacked.
Before any data on decentralized blockchain can be altered, 51% of the network nodes must reach a consensus. In a decentralized blockchain a single compromise on one network node cannot alter the system data when a majority of the network work nodes is providing the accurate information.

Decentralization is important in blockchains because it help users to be in total control of their assets as nobody or entity is governing or in charge of the blockchain. This aspect of users being in charge of their asset has really helped promote the wide adoption and use of blockchain technologies. It has also help promote financial efficacy/freedom among it users.
Users can send funds far and near at their convenient at any point in time without no form of restrictions.

Decentralization has also eliminate the notion of age and where one come from, everyone regardless of backgrounds can join the system and be a part of it. And this is important in blockchain as it has helped make the blockchain system gain popularity.

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Do you think that the existence of the blockchain would be possible without this concept? Is there an alternative or similar term?

The blockchain off course can exist without the concept of decentralization. Blockchains can exist as a decentralized or a centralized system, it is left for a developer when building a blockchain to consider either of the above mentioned systems.

Decentralization is just a concept on blockchain, it does not particularly control the whole aspects and of the blockchain but has it’s specific functions on the blockchain. Decentralization help in the distribution of power and decision making on blockchains, and every user is in control of their assets.

Is there an alternative or similar term?

The alternative of decentralization on blockchains is centralization. Unlike the decentralized blockchain that anyone on the network can participate and transact on the ledger. On centralized blockchain only reputable and credible participants can transact on the ledger. The identities of participants on centralized blockchains are known and therefore their transactions are monitored by governing body, also a third party involvement is required for transactions to take place.

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Do you think it is possible to improve this term in some way? Explain us how

In my option, there are some limitations faced by the decentralization concept of blockchain that needs to be improved, I’ll be explaining some of these in this section.

• Cryptocurrencies built on decentralized blockchain faces the problem of high volatility, that is instability of the price of cryptocurrencies, the prices are always increasing and decreasing without a stable or fixed rate. The reason for this high volatility issue is because no authority is in control of the system operations, users are in charge of their assets and therefore different users come up with different ask and bid prices which leads to the high rate of volatility in the system.

In a way of improving this issue , there should be set regulations on decentralized blockchain systems to guide the rates of cryptocurrencies.

• Another aspect of decentralization I suggest should be worked on and improved is the anonymous nature of decentralized blockchain transactions, the reason is because internet fraudsters prefer the decentralized systems in carrying out their criminal activities knowing that they can’t be traced. The crime history associated with the anonymous nature of decentralized blockchains transactions is the reason cryptocurrencies are banned in some countries.
  The anonymous nature also affect users who make mistakes in recipient addresses during the transfer of assets. Once an asset is transferred to a wrong address it can’t be recovered back, and this is because the recipient details are not made known to the sender and vise versa.

The anonymous nature of decentralized blockchain can be improved so that it can be adopted by all. This can be achieved by the system creating a means through which transactions can be traced from a sender to a recipient so that whenever any criminal transaction takes place , it can be easily traced to the culprit. And this will also make possible the recovery of one’s asset in the case of mistaken recipient address during transfer of assets.

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Conclusion

The decentralized blockchain system is indeed a great one, it has emerged to be one of the best and widely used technology. It a concept that offers blockchain technologies with features such as decentralized decision making, user ownership and control of assets, security etc.

Thanks for reading through my post