Decentralization using blockchain
Decentralization is a core benefit and service provided by blockchain technology. By design, blockchain is a perfect vehicle for providing a platform that does not need any intermediaries and that can function with many different leaders chosen via consensus mechanisms. This model allows anyone to compete to become the decision-making authority. This competition is governed by a consensus mechanism, and the most commonly used method is known as Proof of Work (PoW).
Decentralization is applied in varying degrees from a semi-decentralized model to a fully decentralized one depending on the requirements and circumstances. Decentralization can be viewed from a blockchain perspective as a mechanism that provides a way to remodel existing applications and paradigms, or to build new applications, in order to give full control to users.
Information and Communication Technology (ICT) has conventionally been based on a centralized paradigm whereby database or application servers are under the control of a central authority, such as a system administrator. With Bitcoin and the advent of blockchain technology, this model has changed and now the technology exists, which allows anyone to start a decentralized system and operate it with no single point of failure or single trusted authority. It can either be run autonomously or by requiring some human intervention, depending on the type and model of governance used in the decentralized application running on blockchain.
The following diagram shows the different types of systems that currently exist: central, decentralized, and distributed. This concept was first published by Paul Baran in On Distributed Communications: I. Introduction to Distributed Communications Networks (Rand Corporation, 1964):
Centralized systems are conventional (client-server) IT systems in which there is a single authority that controls the system, and who is solely in charge of all operations on the system. All users of a centralized system are dependent on a single source of service. The majority of online service providers including Google, Amazon, eBay, Apple's App Store, and others use this conventional model for delivering services.
A distributed system, data and computation are spread across multiple nodes in the network. Sometimes, this term is confused with parallel computing. While there is some overlap in the definition, the main difference between these systems is that in a parallel computing system, computation is performed by all nodes simultaneously in order to achieve the result; for example, parallel computing platforms are used in weather research and forecasting, simulation and financial modeling. On the other hand, in a distributed system, computation may not happen in parallel and data is replicated across multiple nodes that users view as a single, coherent system. Variations of both of these models are used with to achieve fault tolerance and speed. In the parallel system model, there is still a central authority that has control over all nodes, which governs processing. This means that the system is still centralized in nature.
The critical difference between a decentralized system and distributed system is that in a distributed system, there still exists a central authority that governs the entire system; whereas, in a decentralized system, no such authority exists.
A decentralized system is a type of network where nodes are not dependent on a single master node; instead, control is distributed among many nodes. This is analogous to a model where each department in an organization is in charge of its own database server, thus taking away the power from the central server and distributing it to the subdepartments who manage their own databases.
A significant innovation in the decentralized paradigm that has given rise to this new era of decentralization of applications is decentralized consensus. This mechanism came into play with Bitcoin, and it enables a user to agree on something via a consensus algorithm without the need for a central, trusted third party, intermediary, or service provider.