The Blockchain – Why Is Decentralisation So Important?

What Is Blockchain?

I assume that you know what a database is.

It’s a place on a computer where lots of information is stored.

If you substitute the word ‘database’ instead of the word ‘blockchain’, it will start to make more sense when you read something about the blockchain.

BitCoin runs on a blockchain. Ethereum runs on a blockchain. In fact, you could create a blockchain and store information in it (if you wanted to, but you might need a lot of programming experience). These examples would be three separate blockchains.

At its core, the blockchain is database technology and a blockchain stores information.

But the blockchain is not just a database because it is also a network of computers.

So just imagine you have a database of information and also a big network of computers. Each computer on that network has a copy of the whole database (everyone has their own copy). This is a simple view of the blockchain. A blockchain network can be quite big and spread out on many computers, often across the world. But everyone on the network can see their own copy of the database. Following me?

What Does ‘Decentralised’ Mean?

The big thing that everyone mentions about the blockchain, (or this new database technology), is that there is no central authority.

This means that no one can go into the database and remove entries or data. No one can go in and change your entire blockchain network, not even the government or the police. This is because there are so many copies of the database on the network, that a central authority would have to go and change every single copy, without anyone knowing, in the blink of an eye.

To change an entry on a blockchain network, or to change an entry in the database, each of the computers on the network needs to decide among themselves what is true and what is not true. So when a change is made, the computers decide among themselves whether or not the change is correct. These computers need to decide what to include in the database and what to not include on the database. One single computer or authority alone cannot decide.

So the blockchain technology is a decentralised technology. No single central authority (bank organisation or government) can control any of the information contained on the network because the network is sharing the information among themselves.

But What’s So Good About That?

There are many benefits to the blockchain technology and particularly being decentralised. A big advantage is reliability.

There is no single point of failure.

Nobody can decide to take down a blockchain network very easily because the blockchain database is stored on all of the computers on the network. A hacker can not delete information because the blockchain is stored on all of the computers on the network. This is why governments can not censor or ban BitCoin or Ethereum or LiteCoin etc.

Picture this scenario. If a government was to decide one day that they don’t like BitCoin and want to ban it, they would need to pull down the entire BitCoin database. They would need to take away any record of your BitCoin transactions. So they might delete your database and everyone else’s database in the country. But the database would still exist on all of the other network’s computers.

So Blockchain technology, in general, is extremely censorship resistant. It’s similar to deleting the internet. How would you take down the Internet? It is certainly not easy, it is also censorship resistant.

In summary, a key feature of the blockchain technology is consensus.

The computers on the network, otherwise known as nodes, all need to agree what is true and what is not true. If something is deemed to be true, it is added to the database. If it is deemed to be not true, then it is not added to the database.

Is A Decentralised System basically just a Distributed System?

No.

Oh. So What Are The Differences?

These two terms are very simliar but with a couple of key differences. Let’s look at the differences and try to understand them.

Both systems (decentralised and distributed) are often networks of computers that are spread all over the world.

For example, BitCoin uses blockchain technology and is decentralised. It is a network of computers that are running all over the world.

However, Google’s uses a distributed system. It is also a network of computers that are running all over the world.

The difference between the two comes down to authority.

In BitCoin or Ethereum for example, there is no central authority. We already know that no one can just come along and remove a file or a transaction record because they didn’t like the client or didn’t like the details of the transaction. It is decentralised, so all of the computers on the network would have to agree to removing the transaction.

However a distributed system has a central authority. Google can (and does) decide what is inside each database on each computer on the network. It can decide how each computer behaves on this distributed system.

Decentralised systems are trustless, decentralised and censorship resistant. You do not have to trust anyone. The network will take care of everything because of consensus. But a decentralised system is inefficient, slow and hard to manage. For example how do you update a blockchain system? It is definitely possible, but it is a lot of work if you compare it to just updating a cloud server.

Distributed systems are easier to manage and it is quicker than a Decentralised system. However there is a degree of trust, so you are relying on the central authority taking care of your data. You need to trust that they will not abuse your data or spy on you. A distributed system can have trust, security and reliability flaws in the cases of hacking or a server shutdown.

So block chain and decentralised technologies are much more secure and reliable.