What Is Bitcoin Decentralization?

May 28, 2020, by Maayan
Decentralization is one of Bitcoin’s key features―it’s what protects Bitcoin from control and allows it to offer financial freedom.

What Does Bitcoin Decentralization Mean?

Bitcoin is often said to be “decentralized,” which means that no government, individual, company, or group can exercise control over it.

In fact, Bitcoin is decentralized in several different ways:

1. Transactions:

Bitcoin relies on a large network of miners and nodes to confirm transactions. Whereas banks or credit card companies can stop suspicious transactions, miners process transactions indiscriminately. Nobody can block a Bitcoin user’s transactions based on their reputation or identity.

2. Security:

Bitcoin’s decentralized mining network also provides protection against attacks. No single actor can take over the Bitcoin mining network (or perform a “51% attack”) or create false transactions (also called “double spends.”) In other words, miners work together to prevent activity that would undermine Bitcoin itself.

3. Fund storage.

Many exchanges store Bitcoin in a central account on behalf of their users. However, standard Bitcoin wallets give each user personal control over their funds through a system of “addresses” and “keys.” This cryptographic system eliminates the need for a central authority that manages user accounts.

4. Development.

Bitcoin is developed by a wide community of independent developers. Although those developers must all settle on which features Bitcoin should have, there is room for disagreement. Developers who disagree with the majority are always free to create a fork of Bitcoin with different features.

5. Branding.

There are a few high profile websites like Bitcoin.com and Bitcoin.org, but there is no single organization that owns the rights to Bitcoin in its entirety. This is beneficial because it allows anyone to start their own Bitcoin-related project.

Decentralization is what allows Bitcoin to deliver financial freedom―and the crypto community is working hard to keep it that way.

Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.

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