Hello to everyone. I am happy to be in Season 4 of Crypto Academy. Let's continue to move this community forward together.
In this assignment, I will try to explain what a decentralized system is, its advantages and disadvantages, and in which areas it can be used. I wish you pleasant reading.
Question
Define decentralization. Describe the advantages and disadvantages of a decentralized system. In what areas of life can a decentralized blockchain be helpful?
Decentralization is the opposite of centralized power. Unlike assets that are managed from a single authority, here the authority rests with the asset owner. It manages its transactions by itself without being tied to any power. This system is in stark contrast to the banks and government systems commonly used today.
Because of the decentralization is a decentralized system, users do not depend on others for decision making and have free will. It can also be called self-management. In this system, users are free to decide. Decisions made by a person are only binding on him/herself.
In the central system, the decisions made by a person can completely affect an institution or system. For example, when there is a global crisis, the banking sector may collapse completely. A decision made can even affect the whole world. However, this is not possible in a decentralized system. Because everyone is free to make decisions, the effects of the crisis are not felt the same for everyone.In a decentralized system, decision-making power resides with everyone in that system, not just those at the top.
The emergence of Bitcoin was aimed precisely at the development of this system. Satoshi Nakamoto created Bitcoin as an alternative to fiat currencies. As you know, other currencies are not very independent as they are centralized and managed by an authority. The purpose of Bitcoin is that users can send, trade and invest money without being tied to any authority. Blockchain system was used to make this system permanent. Thanks to the Blockchain system, the data of the users will be kept in a highly confidential manner, the transmissions between addresses will be made with certain encryptions thanks to cryptography, and the decisions that the users will make about their assets will be their own. How democratic, isn't it? It is also a great advantage that the security is extremely high. The user's data is never shared with third parties and they are not allowed to interfere.
- So what are the advantages and disadvantages of this system?
| Pros of Decentralization | Cons of Decentralization |
|---|---|
| The security in the decentralized system is extremely high because the Blockchain system is used. | Because of data transfers between individuals are kept confidential in this system, incidents with criminal elements may occur (terrorism funding, drug trade funding etc.) |
| In this system, users' data cannot be changed by third parties. | Although it varies according to the area in which it is used, it can be difficult to make a joint decision since all users have the right to decide. |
| In the decentralized system, users have the right to decide. | If an error is made during a transaction, it is impossible to correct this error. (For example: Sending to the wrong address in the transfer between addresses.) |
| In this system, transactions are faster as there is no need for an authority's permission. | |
| Fraud and theft become impossible because there is data transparency. | |
| Trading in the decentralized system is fast and simple. | |
| In this system, power is evenly distributed. Everyone has a say in progress and aims to create a more liberal structure. | |
| Diversity is available. In this way, every idea has significance. |
We talked about the advantages and disadvantages of the decentralized system. So in which areas can this system be used?
Health Sector
As we know, a patient's data is recorded in the health sector. However, the recorded information is generally not shared or sent to anyone other than the doctor concerned. However, thanks to the transparency, which is one of the advantages of the decentralized system, the patient's treatment can result in more positive results, as the patient's information can be shared with any doctor. Because people always want to go to a better doctor. A patient who cannot leave his city can find a better treatment opportunity thanks to this system.
Banks
The banking sector is completely dependent on a central authority. Although the data of users with a certain asset are kept secretly in the bank, it is not as secure as in the blockchain system and with strong attacks, both assets and user information can be captured and transferred to another address. With the decentralized system, it is possible to avoid this problem. Also, the person does not have to contact the bank to manage their assets. With this system, banking transactions become both transparent and accelerated.
Politics and Elections
You know that politics and elections are a big problem, especially in countries where authority is in one hand. Every election time, a great war breaks out between the ruling and opposition parties. While advocating for democracy, the subject of cheating is not missing. The decentralized system can prevent this. Thanks to transparency and unobstructed data, cheating and fraud can be prevented. People feel that their votes are safe and everyone can stand behind their free decision.
The increasing prevalence of the decentralized system enables us to research and develop these subjects. In addition, I think that this system should become widespread because we already knew about a system with a central authority and realized that it had more cons than pros. As I mentioned in the article, every system has its pros and cons, but that doesn't mean it can't be improved. In a time when we need privacy, freedom and speed, a decentralized system is just what we need. I predict that the blockchain system can be used in every field in the future. If we want to feel safe in every area, we need to install this system in many areas of our lives. I could only give 3 examples, but these examples will increase in the future and we will start to feel the benefits of this system.
Thank you for reading.