Hi Steemians, Pundit Bee here.
As I said in my introduction post, I will now dive into some knowledge sharing!! Starting off my ride!! I will try to hold my explanations in the simplest ways possible.
Cryptocurrencies have become really famous and there are many solid reasons for it. One of the main reasons is that almost every type of coin is decentralized. Many ride the wave because it is the 'trend', without knowing the significance behind the technology. One needs to understand the importance of decentralized systems to appreciate the value of cryptocurrencies.
A centralized system has a point of single authority - a point of control that manages the operations that are done within the system. For example, a Parliament that governs a country is a very good example of a centralized system. All decisions are made at the top. Another perfect example is a business run by an owner where he controls every decisions.
To the contrary, in a decentralized system, all decisions are made at lower levels. There is no central authority to control the operations done in that system. The power to decide is distributed. Comparing with the above examples, one can say that a system where citizens elect the government is a decentralized system – the citizens are the deciding authority and the power to decide/choose does not belong to a single person. A business organization where the decisions are made by a board of members rather than the owner is another easy-to-understand analogy.
In terms of computers, in a centralized network, data pass through a single server, and hence the server has control of all the data. When you do any kind of operation, the details about it are stored in the central server. If you send a file through an email (currently almost every major email provider is centralized), the file not only reaches the receiver, but is also stored in the email server, giving the provider access to your personal information. But this is not the case for decentralized systems, which make use of P2P transfers.
In Peer-to-Peer (P2P) network, the data transfer is directly done between the parties involved without any intermediary. Downloading Torrents is a common example of this case where the transfer happens directly between the sender and receiver. Lately new projects are being developed to provide decentralized email systems, where emails are encrypted and the identitites of the involved parties are protected.
So, now its time to answer the question - How does this play a role in cryptocurrencies?
The technology behind cryptocurrencies, Blockchain Technology, heavily relies on decentralized P2P networks. No single computer oversees the data transfer; multiple systems work together and collectively process the transfer. Hence the control is distributed. The information exchange is highly safe and cannot be accessed by anyone else other than the sender/receiver (Remember - P2P!!). Thus the decentralized cryptocurrencies are not owned by a single individual/organization or government.
With people expecting their personal data to stay hidden, there is a heavy demand for decentralized systems . Small scale apps to multi-billion dollar giants are turning their eyes towards decentralized applications (called Dapps, in short). The future of decentralized apps shouldn’t be underestimated.
How was my first technical post? I hope I was clear in conveying my thoughts.
Suggestions/constructive criticism are highly welcome.
Will buzz again soon!!
SHARING IS CARING
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