Decentralisation or being decentralised can be clearly defined as follows –
“decentralized means that not one single entity has control over all the processing”.
But Why does Decentralisation matter so much?
Yes, decentralised is the main reason for Bitcoin’s success many times. So it’s quite evident that you may ask why it is important.
Earlier, there were few common reasons, such as –
- To overcome current struggle with respect to power of control that the humanity is facing.
- In order to have the money distributed among all.
- Or to include everyone in the participation process.
- Or to provide a certain amount of equality in the financial system.
But the most among all reasons, is the fact of gaining unlimited power. Let’s understand through a simple example –
The example shown in the image basically uses probability or statistics, to analyse the game theory. Consider the basic prisoners’ dilemma. As the first mover has most advantage, the probability is that the first prisoner will snitch on the second, although it deviates from the optimal move for both, which would be to just remain silent.
The money distributed is considered as reward and the participation as competition. This is why even the participating users could turn out to be validators as well. Thus much like the example, making it an optimal move.
More Insight –
Miners as a Factor for Decentralisation –
Another factor is considering all users to be miners. This is kind of important since few people do not want to spend their valuable time on validation of the transactions, rather they expect miners to do their work and also have hopes on them to be honest enough due to the reward system mentioned earlier.
But here, more than rewards, it is the open-ness provided on the main network that matters. This is because people tend to consider scaling means to have second layer solutions or cryptocurrencies other than bitcoin to serve different purposes with the bitcoin as the base settlement layer. This as a result means that the base layer, which is bitcoin has to be completely decentralised as well as self-regulated.
One such example could be BitcoinCash whose purpose is to only be as cash whereas Bitcoin’s purpose would be as a safe and decentralised base layer to store the value.
Thus, decentralisation means to have options and to avoid ruling by one single party.