What is decentralization? How does Bitcoin achieve decentralization?

Dec 24,2022
What is decentralization? How does Bitcoin achieve decentralization?

"Centralization" and "decentralization", which have been quarrelling since the Internet era, seem to have a more profound interpretation in the blockchain era. Even the founder of Ethereum, God V, jumped out to respond to the real meaning of decentralization, which shows its important position. So, what exactly is decentralization? How does Bitcoin achieve decentralization? Next, let's have a look.

What is decentralization?

"Decentralization" was originally an ecological principle in natural science. The results of encyclopedic search are as follows: In a system with many nodes, each node has a high degree of autonomy. Nodes can be connected to each other freely to form new connection modules. Any node will become a periodic center, but it does not have a mandatory central control role. The influence between nodes will generate nonlinear logical relationship through the network. This kind of open, flat and equal software condition or structure is called decentralization.

In the network era, "decentralization" is a condition or structure, which can only appear in systems with many customers or nodes. Each customer can connect and affect other nodes. Generally speaking, everyone is the center, and anyone can connect and influence other nodes. Such flat, open source, and fair situations or structures are called "decentralization".

Nowadays, "Decentralization" is one of the common features of blockchain. It applies distributed storage and computing. The rights and obligations of the entire node are the same. The data in the system is actually jointly maintained by all network nodes. Thus, the blockchain no longer relies on the central processing node to complete the distributed system, recording and upgrading of data. Each blockchain follows a unified standard, which is based on cryptographic algorithms rather than credit certificates, and the data update process requires customer permission, so that intermediaries and trust organizations do not need to recite to establish the blockchain.

Here, we should pay special attention to the misunderstanding of "decentralization": decentralization=no center. Decentralization does not mean that there is no center, but center diversification. All people can become centers. Any center is not permanent, and the center has no mandatory effect on everyone.

Advantages of blockchain decentralization:

1. Strong fault tolerance. Decentralized software is unlikely to stop running due to a problem in one part, because it relies on many separate nodes to work.

2. It is not easy to be attacked. Decentralized software is less vulnerable to attack. Since one or several nodes of the system are attacked, the operation of the whole system cannot be affected.

3. The data cannot be tampered with. In a centralized company or organization, managers usually collude with each other to change data without authorization and destroy customer rights and interests for their own interests. In the decentralized system, each node operates separately and in parallel, and the data records cannot be changed. In this way, all kinds of data will be more open and the rights and interests of customers will be better protected.

How does Bitcoin achieve decentralization?

So, how does Bitcoin system achieve extreme decentralization?

In Bitcoin's white paper Bitcoin: A Peer to Peer Electronic Cash System, Nakamoto explained in detail how he designed the system. Among them, he established the key design principles of all blockchain systems since then.

A true point-to-point electronic cash should allow direct online payment from the initiator to each other, without the need to rely on a third-party financial enterprise.

Although the existing digital signature technology has brought some solutions, if a trusted third-party organization is required to avoid the "double payment" of (electronic cash), it will lose the key benefits.

For the "double payment" problem of electronic cash, we provide a solution with point-to-point network technology.

The network adds a timestamp to the transaction record. After hashing the transaction record, it is divided into a growing chain, which is composed of the hash based proof of work. If the proof of work is not repeated, the resulting record will be difficult to change.

The longest chain is not only used as a proof of the observed sequence of events, but also generated by the largest CPU processing pool. As long as the computer nodes that control most of the CPU processing capacity do not jointly attack the network itself (with the attacker), they will generate the longest chain and leave the attacker behind.

The network itself must only be constructed in the simplest way. The information shall be broadcasted throughout the network as much as possible. A node can leave and rejoin the network at any time, just use the longest workload proof chain (when rejoining) as the proof of transactions occurring in the offline period of the node.

William Mujaya analyzed the abstract of the white paper on Bitcoin in his book Commercial Blockchain and summarized four points:

Point to point electronic trading;

No need for financial enterprises;

Encrypted evidence rather than centralized credit;

Credit exists in a network, not a central organization.

From this summary, we have refined five key points of Bitcoin system design: Bitcoin's blockchain system is composed of a distributed ledger (i.e., a narrow blockchain) and a decentralized network (point-to-point network), and the method to generate the chain is the workload proof consensus mechanism. The longest chain is determined by the calculation rate in the network, so this is reliable. Node departure and addition are based on the principle that the longest chain is reliable. These combine to form a Bitcoin system.

Speaking of this, I believe you have a certain understanding of what decentralization is and how Bitcoin implements it. In general, in the blockchain, different projects like to point to each other instead of true decentralization. This kind of pure decentralized culture not only does not help the development of the project, but also is counterproductive. Before pursuing "decentralization", we must think clearly about its purpose.