What is the Decentralized Essence of Blockchain Technology (Decentralized Features of Blockchain)

The decentralized essence of blockchain technology, what is it? What is the essence of the decentralized nature of blockchain technology? Let’s understand it briefly. It has two types: one is considered an algorithm of distributed ledger, and the other is driven by smart contracts. In blockchain technology, each node has its own code, which enables participants in the network to make decisions on these transactions according to the rules without the need for any third-party intervention. The decentralized nature of blockchain determines its immutability and trustlessness, so it can be understood as a consensus mechanism that sends information from a single system to multiple parties and reaches an agreement, thereby ensuring the security, scalability, and transparency of the entire system.

Currently, most blockchain projects are exploring how to apply blockchain to other fields. But one key question is whether blockchain has its unique value. So what is the unique value of blockchain technology itself? The term “blockchain” was created by computer scientists and cryptographers, so it is usually called “chain.” Blockchain technology is an open platform or public chain that solves the problem of data sharing using a distributed database architecture. It also allows various new applications based on distributed ledger technology, such as digital identity authentication, cross-border payments, and remittances. However, in reality, blockchain is just a general tool. The difference of blockchain technology is that the blockchain protocol adopts the accounting method of cryptocurrencies and the data of each blockchain record is public and cannot be forged or tampered with. The term “blockchain” does not have a specific legal definition, and the term “bitcoin” comes from one of the original intentions of bitcoin, which is to achieve instant exchange between peers. However, even so, bitcoin still needs to be processed in a completely decentralized manner, which means that not all users need to have private keys, passwords, and other sensitive information. In addition, although blockchain does not rely on traditional centralized institutions to store personal information of all users, it can protect privacy and control data.

What is the essence of the decentralized nature of blockchain technology? Let’s look at the following two examples:

1. Bitcoin is a block reward calculated by a hash function (SHA256). Because bitcoin mining is generated on the network, not managed by a single person like the regular internet. If you want to get more information about your own assets, you must choose the most secure application. Of course, this can also be used as the underlying layer of the blockchain network. In other words, bitcoin should not have a central entity but should be based on a relatively fair environment. Secondly, to ensure the security and reliability of a decentralized network, bitcoin developers have been working to find a way to improve transaction speed.

Decentralized features of blockchain

The development of blockchain technology has entered the decentralized stage, and the rise of distributed ledger technology is the most important. Many people believed that bitcoin was a means of storing value before its birth. However, in the long run, this was not the case because people at that time did not know the truth and its relationship with any entity. But now there is a prevailing view that bitcoin is actually a highly centralized and decentralized network and smart contract platform. “If we don’t change this, we may fully control a part of the nodes in the network,” says a prominent developer, “just like computer systems do.”

In fact, even so, blockchain can still achieve faster updates of transaction information without being hacked or manipulated, and because of its “scalability”, it has a better security model than other cryptocurrencies like Ethereum. For example, when a miner sends a large amount of data through a specific address, the user will receive some block rewards.

But what cannot be determined currently is which wallet holds more tokens. Instead, they may gain these funds as rewards and further upgrade themselves by retaining all balances, thus keeping their private keys. Therefore, most people may choose to transfer their tokens to a separate wallet.

As more and more people realize this, they no longer need to rely on third parties to manage these assets or store them in public devices like cold storage. In other words, they must ensure that they have sufficient resources to execute them, otherwise, they will never use them. To solve this problem, the Bitcoin community has been discussing whether the same thing should also be true for them: “If you want to participate in this activity, you must have a team composed of you to supervise your decisions.”

For companies that want to participate in mining, they usually provide liquidity to exchanges within an hour and then adjust according to price indices. But if they want to continue running their businesses and operating their products and services, they can launch new mining pools again after a few days. However, when someone tries to purchase their tokens with another exchange, they often only charge a certain fee. (Cointelegraph)