Decentralization with Blockchain
How does the internet works? How the internet is centralized? What is Decentralization? Why it matters? Applications and uses of blockchain?
To understand decentralization first we need to understand our current internet or web2, in our current internet model, a few companies are controlling the internet like Amazon, Google, Microsoft, etc.
The Internet is an interconnected network of computers around the world.
How does the internet works?
You are reading this article on your device, but did you know how you get it? you probably think you just type the article name on Google or type the URL of this page on your web browser and the page appears but there is more to know.
If we want to communicate between computer we need to link them, we can be connected them by wire but when there are many computers then the wiring becomes complex, Suppose we want to communicate between 10 computer each computer need to connect to the other 9 computers with wire and we need to do the same with rest other 9 computers, so we need total 45 wire just to connect 10 computer directly to each other.
To make this simplify we can use a router, routers are the devices that manage and make sure the message route to the correct device. We can connect the router with only a few computers but as the router is also a computer it can connect to another router to form a network. Suppose a router can connect to 10 devices and there are 3 routers each connecting to 5 computers. Still, if we want to send a message from router 1 computer to router 2 computers we need to connect this router so we can use another router to secure it.
The network we just created is contained to our self like in a building or a local area but if we want to connect to other networks around the world we need a well-structured infrastructure that is connected to other networks, so here comes the play of ISP( internet service provider ) like JIO, Airtel, and BSNL they are the internet provider or like a router which connected around the world. This forms a network of computers which we called the Internet.
Now the question here is, How this article is displayed on your device, and where from this data come from? Every computer has a unique IP address, the IP address is a unique string of characters that identifies each computer using the Internet Protocol to communicate over a network. Whenever we upload some data to the internet like Photos, Videos, or Articles this is stored in a Data-Center, Data-Centres are massive computers with lots of data storage that store the data. This article is stored in a Data-Center, suppose we can say this article is stored in a Data-Center which is located in Mumbai, and that Data-Center is connected to an internet service provider, So when we call the server with this article's URL on our browser, the browser will look into DNS and return the IP address. After we obtain the address we form a connection and access this article.
The Domain Name System (DNS) is the phonebook of the Internet where every URL is mapped to the IP address of the server.
How the internet is centralized?
The internet can be decentralized but there is some aspect of the internet that is centralized and can be problematic. Here are some of the centralized points:
Control of infrastructure: As we have seen the internet is made of many computers around the world and that can be decentralized but to make this structure we need ISPs and hosting providers, and this means the company which provides it has the power to control the internet. Here is an example, if the government wants to block some websites in their country, they order the ISPs to block the URL of the website.
The dominance of a few large companies: There are some segments of the internet which is control over by a few big companies, such as Google holds a 92.9% share of the search engine segment, and Meta holds 76.55% of the social media segment. This affects the free flow of information, privacy, and competition.
Use of centralized platforms and services: when we want to surf the internet we need an email address like Gmail or when we need to message someone we need to use a messaging app like WhatsApp and if we want to store data in the cloud we need a cloud storage company like Google cloud or iCloud, this service is often centralized and we need to depend on this companies to handle our data correctly and if there is any data leak or misuse of our data it can affect or privacy.
What is Decentralization?
Decentralization refers to the concept of distributing the power from a single decision-making authority to individuals or entities. Instead of relying on a single group of people to make all the decisions the power is distributed among many parties. The concept of decentralization can be implemented in many places like ownership, finance, land record, politics, and many more.
Blockchain helps us to implement this concept in the real world. Decentralization is the key characteristic of blockchain technology. All participants have equal access to the network and can participate in the decision-making process.
In a blockchain network, transactions are verified and added to the blockchain through a process known as consensus. Consensus is achieved through a decentralized network of nodes that work together to validate transactions and maintain the integrity of the blockchain. Each node has a copy of the blockchain and uses algorithms to verify transactions and reach consensus with other nodes.
Why it matters?
In our current internet, some companies are responsible for the critical functioning of the internet but as these companies are centralized systems, if the centralized authority is compromised, the entire system may be at risk. Decentralization can provide greater security by reducing the risk of a single point of failure. As blockchain has distributed control among multiple nodes, it is difficult to compromise the entire system.
One of the other points is that there is minimal to no transparency in the centralized system, the decision-making and transaction are decided only by a few people and it is difficult for an outsider to know what happens in a company. But, in a blockchain, everyone can contribute to and verify every transaction, this established a great transparent and open system that helps build trust.
As I have explained before that in blockchain the control is distributed among multiple nodes, which means anyone can run a node and have equal control as others, and everyone has equal access to services and opportunities on the blockchain. This provides greater access by removing intermediaries and enabling peer-to-peer transactions.
Applications and uses
There can be many applications of blockchain but some of the famous uses of blockchain are :
Decentralized finance (DeFi) 💸: The money you own is controlled by the government and centralized authorities, who can block payments or deny you access to your money. There is also the risk of error and corruption due to human intervention in our current financial system. As an alternative, we can use Decentralized finance (DeFi), a collective term for financial products and services that are accessible to anyone which is based on blockchain. Here every transaction is open and accessible to anyone with an internet connection.
Non-fungible tokens (NFT) 🖼️: NFT provides proof of ownership of digital assets on the internet. Suppose you create a digital asset like a collectable, music, or video, How do you prove it is yours? Whenever you minted a digital asset on a blockchain it creates a unique token of that NFT and stores it in your wallet, it now lives on the blockchain and anybody can verify that it is yours. As you have minted it first. NFTs can also use to prove the ownership of real-world objects or assets.
Decentralized autonomous organizations (DAOs) 🤝: DAOs are the digit organization that lives on the blockchain, in this organization there is no central authority, and rules are written on smart contracts. The voting system of a DAO is typically based on the amount of cryptocurrency that a member has invested in the organization, known as tokens or shares.
There are more applications and uses of blockchain which I will explain in detail later in this series.
What's on the next article?
Next, we will see what is cryptography as it is important to know before we start learning blockchain.