Decentralization
Blockchain decentralization is a “paradigm shift” from centralized systems. It distributes power and control
across a network, enhances security, and promotes transparency. This technology has far-reaching
implications beyond cryptocurrencies, including supply chain, healthcare, and more, where trust and security
are paramount.

The key concepts of decentralization include:
Distributed Ledger
Traditional System: In a traditional, centralized system, e.g., a bank, all records are stored in one place. If
this central point fails or is attached, the entire system is compromised.
Blockchain System: In a blockchain, the ledger is spread across many computers – called “nodes”. Each
node has a full copy of the ledger, ensuring no single point of failure.

Consensus Mechanism

Decision Making: Instead of a central authority (e.g., a bank manager), deciding on transactions to be made,
in blockchain the transactions are agreed upon by consensus among the nodes.

Process: When a new transaction is made, it is broadcast to the entire network. The nodes verify the
transaction based on preset/pre-agreed rules and add it to their ledger copy if it is valid (approved).
Security and Trust
Cryptography: Each block in the blockchain is secured using complex mathematical algorithms, making it
extremely difficult to alter previously created records.
Trust: As every node has the same version of the ledger and follows strict rules for validation, trust is
established -not through a central authority, but through the network’s collective agreement.
Transparency and Immutability
Transparency: every transaction on the (public) blockchain is visible to anyone who accesses it, promoting
transparency.
Immutability: once a transaction is adde

Blockchain is a decentralized system that doesn’t have a single point of control. Instead, it is maintained by a
network of nodes (computers), each holding a copy of the ledger. The data is stored in blocks, and each block
is connected to the previous one, forming a chain. This makes it extremely difficult to alter records. Every
transaction taking place on the blockchain is transparent and can be seen by everyone in the network. The
use of cryptographic techniques ensures that data is secure and tamper-proof. Once data (or a transaction) is
added to the blockchain, it cannot be altered or deleted. This ensures a high level of data integrity and trust.
Blockchain is widely used for cryptocurrency transactions like Bitcoin and Ether. Still, there are several other
uses, in areas like supply chain management, voting systems, and anywhere where transparency and security
are crucial.

Key Differences in Simple Terms

Control: Traditional databases are like a personal diary kept and managed by one person. Blockchain is like
a shared ledger where entries made by anyone are visible to everyone and cannot be erased.
Security: Think of traditional databases as a bank vault that is secure but managed by the bank itself.
Blockchain is like a transparent safe where everyone can see what’s inside, but no one can change or remove
anything once it’s put in.
Data Modification: In a traditional database, you can easily change past entries (like editing a Word
document). In blockchain, once something is written, it’s more like writing in pen on a piece of paper – it cannot
be erased.
For selecting the technology that would best serve the user needs or application, it is essential to understand
the above differences.