From Central Control to Decentralized Excellence: The Blockchain Paradigm
Have you ever tried to give a literal meaning to an idiom?
Let’s look at this phrase: “A stitch in time saves nine.” In the literal sense, this can mean mending or stitching a loosened cloth by attaching a new button on time to prevent the other nine buttons from falling off. In other words, what affects one affects all. We can use the literal meaning of this idiom to illustrate what blockchain technology is all about.
A combination of two terms forms the phrase Blockchain: block + chain. They are data or information stored in a block and chained with other blocks. The chaining of many blocks creates a decentralized form. This is because each block has equal rights.
In today's tech world, centralization and its challenges worry many people. One of its challenges is the power given to that central entity to make decisions. The people then sought a different way to participate in the decision-making process. This has led to the search for and rise of blockchain technology.
Blockchain technology is the backbone of Web3. When you hear the term Web3, what comes to mind is decentralization. Blockchain influences the change from a centralized to a decentralized system.
This article will seek to offer a solution to the centralized control dilemma. You will have an overview of how the blockchain plays a significant role in this paradigm shift. Also, we will be able to examine its importance in today's world.
The Central Control Challenge
In a traditional setting, like Nigeria, a single body controls an organization. A typical example is the head of an educational sector. This central body performs the following acts:
makes all decisions and rules
has firsthand access to information
wields so much power, irrespective of the consequences.
To resolve the central control dilemma, we introduce the term decentralization. As a result, blockchain technology adopts decentralization to reduce the control that rests on a single entity. In this case of decentralization, the people hold equal power and control.
Blockchain as a Paradigm Shift
One kind of distributed ledger technology (DLT) is blockchain. It is a database containing encrypted data of all kinds that use private or public key encryption for it to be part of a block. Encrypting data means turning information into special codes to keep it safe from unauthorized access.
Blockchain technology is highly decentralized. How does it work?
A transaction takes place (data transfer)
The data is being verified
The data is added to the block
The block is linked to the blockchain
Transaction complete
From verifying the data to adding it to a block, several factors go into place to make this happen. They include:
Mining
Proof of Work (PoW) or Proof of Stake (PoS)
Hashing of the block
Note: Hashing is like a fingerprint. It helps to identify the data in a block so that when a block is altered, its hash changes. Hashing secures each block by making the next blocks invalid when certain information in a block changes.
When more nodes join a network, the chain becomes safer and more decentralized. All nodes connected to that peer-to-peer network receive exact copies of that blockchain.
Decentralized Excellence in Blockchain
The following are the benefits of decentralization in blockchain technology.
Transparency: For data to be transparent, all nodes have a copy of the blockchain. By doing so, no one can manipulate the results. So, as other nodes validate information and are added to a block, records are made on each node.
Immutability and Security Advantage: Once a block is added to a blockchain, the data in that block cannot be changed or altered. This is possible through hash. A hash keeps the blockchain safe by making a block invalid if its information changes.
Consensus Mechanism: This is a general agreement amongst all nodes connected to a network to verify and validate transactions. Proof of Work (PoW) is the first consensus mechanism. The miner in a PoW validates transactions through computation. This computation is a complex puzzle that will earn them a gas fee (like a reward) if a block is successfully added to a chain.
The second most common consensus mechanism is Proof of Stake (PoS). Here, we substitute miners for validators, who lock up coins as stakes while they validate a block. If they successfully add a block to the chain, they earn a reward whose proportion is worth the coin being staked. PoS is a wealth determinant.
Conclusion
This article reveals the basics of blockchain as a decentralized technology. This is not to rule out the centralization of certain entities. It is to make known what the world will be like if the world adapts to a decentralized approach.
Further Reading