Thanks to Blockchain and Cryptocurrency, the term decentralization has grown in popularity over the last decade. Who would have thought that such a term would one day become a household name? There is no doubt that we throw this term around now more than ever before.
The decentralization feature of Cryptocurrencies is probably their biggest selling point. You see when Cryptocurrencies were first conceived, the world economy was in turmoil. We had just witnessed the 2008 recession and people had lost faith in the existing financial systems. Then someone created a system that does not rely on a centralized authority? It was indeed a dream come true.
In the following article, we are going to explore decentralization in terms of its meaning, merits, demerits, and its role on the Raycoin platform.
What is decentralization?
Have you interacted with this term before? Take a guess before you proceed, what do you think it means?
Decentralization is almost like delegation where small portions of a given job/function/unit are divided through a system through to the lowest level of authority. The managerial work is divided and assigned to individuals with various executive skills. The various members also participate in decision-making despite their managerial hierarchy.
Our typical finance system was always dictated by the government, central banks, and other centralized financial institutions. Then came cryptocurrency which gets rid of these systems entirely and places all authority on the Cryptocurrency holders. No wonder most governments continue to fight Crypto.
Why is decentralization Crucial?
As already mentioned, decentralization was and still is a great selling point for Crypto. Think about it, if your government no longer controls your money then you earn true financial freedom. Decentralization puts you right at the driver’s seat of your financial life.
Secondly, it prevents inflation. Most times when the economy is in trouble, the government will authorize the printing of more money which then devalues the currency. That won’t be possible with crypto, no wonder the prices keep soaring.
Elimination of intermediary costs. People no longer have to rely on banks and other intermediaries to help with transactions. Goodbye to overdraft costs and high transaction fees among many other unnecessary costs.
Roles of decentralization
- Transparency and openness. All Raycoin platform participants (traders, investors, developers, creators, and businesses) have direct interactions with each other. By eliminating intermediaries, the platform allows for increased transparency levels and subsequently increased tryst levels among different participants.
- High level of security. High integration and interaction between participants go a long way in preventing hacks and thefts. A hacker would have to go through all the participant’s systems to hack a single crypto-network, attempting harder than before.
- Consensus. All the RayCoin market participants and members take part in the decision-making process. As opposed to centralized systems where the decision is made by the minority and imposed on the majority.
- Increased speed and efficiency. Traders interact directly which save both money and time; there are no intermediary process and protocols to lag the process.
Are there any downsides to it?
The only downside that I can think of is how complex and elaborate decentralization can be. Individuals must therefore make a conscious effort to understand them. Also, the system is relatively new not yet fully developed.
