Decentralization in Cryptocurrency: Reinforcing Control and Transparency in the Financial System

The main difference between cryptocurrencies and standard financial systems is their management and decision-making systems.

The standard financial system is centralized. This means that there is an institution that handles system management and controls the decisions taken in the system. Let's take the example of the banking system in general. There is a limit to the amount of money an account holder can withdraw from an ATM in a day. The number of online transfers is limited. Everything regarding customer accounts is handled by the bank, so accounts can be frozen for any reason. Generally, account holders in the banking system do not have full access to the account.

In contrast, cryptocurrencies are built on decentralized networks. This means that control, management and decision making are handled by each participant in the network. Bitcoin holders have complete control over all their digital currencies.

Why decentralization is needed

Decentralization is always necessary. Cryptocurrency innovation highlights the need for decentralization in many aspects of life. The following are the reasons why a decentralized system is needed:

Transparency: This is the main reason why a decentralized system is necessary. Decentralization provides transparency. This means that nothing that happens on the network is hidden in secret.

Control: Decentralized system provides 100% control over private activities on the network. In the case of cryptocurrencies, decentralization requires that coin holders have complete freedom to use their digital currency. There are no higher permissions to restrict activity on the network

Protection from system failures and hackers: Decentralization requires that networks be built using a distributed model. Therefore, failure of a system will not affect network functionality. Likewise, decentralized systems are highly hacker-resistant.