We have all been accustomed to the growing banking influence that has envisaged the financial sector till 2010. Since banks are responsible to pay and finance businesses and individuals based on credit, loans, and mortgages. As blockchain is the consensus-based model made to give power to the operators and its produced rewards known as coins or tokens. Another prominent feature associated with blockchain is decentralization. By decentralization, we mean the flow of what to mine and when. Though the first blockchain was Bitcoin, having lesser difficulty levels in the start, as time passed, the mining difficulty increased resulting in high computing power and more expensive equipment.
Now, as many businesses are making their financing needs meet by incorporating blockchain technology, the matter of concern is which should be the best project to invest in and it may not end up as a Ponzi scheme. Because in the last bull run of 2020 and mid-2021, many new projects swirled in the market and took people’s funds away. Such fraudulent attempts are part of the grand crypto market, but to evaluate and have a critical eye for what project seems more promising is a hard-wired skill and takes experience and a learning attitude. To make our understanding in the sphere of crypto adoption, we have all heard lots of times about its safety, security, and consensus model while being decentralized at the same time. So, what is decentralization, and which one is the most decentralized blockchain? To answer this, we must adopt some pivots, and which blockchains or blockchains are fully decentralized.
What is Decentralization?
To know the perplexity of the term decentralization, we would take the example of how cash is minted and distributed, and its supply is determined. In the common cash printing mechanism, how much would the supply and how much is to be printed of any currency, is in the hands of the government, backed up by seeing the macro and micro-economic indicators and certain policies. This makes the cash cycle of money or fiat end up in the hands of the few while all others remain downtrodden and devoid of money and hence living on limited means and taking credit for day-to-day needs. The terms such as inflation, deflation, and poverty all surfaced due to the control of cash in the hands of those in power. The concept of centralization makes the supply of money and its associated resources succumbed to and controlled by one authority. When we make a stark comparison of centralized vs decentralized currency transparency is the key characteristic.
Why We Need Decentralization?
The centralization of the system brings with it some control and authority whereas the rewards of having transparency and an entry barrier are missing. To eliminate control and authority, there is a need to make every transaction appear for the public to view and there should be a cap on the total supply. In decentralized systems, the state of dynamism is always present. You will find anyone can enter the blockchain network and take full advantage of the process of mining or trading. With the advent of blockchain, many exchanges now offer trading services, although slight centralization is present.
As there is a constant state of flux in decentralization, the percentage of total token or coin supply is limited. No one can come and increase the total supply. Though after exchanges came up, some hybrid exchanges are providing, both centralized and decentralized systems such as Bitflex. Centralization works up to a certain extent where you must provide your identity proof to help stay safe from hackers and illegal hacking attempts to private keys. Many exchanges now demand a proper KYC (Know Your Customer) to know the background of their workers as well as their past activities to detect any illegal or fraudulent attempts made on their behalf.
Most Decentralized Blockchain
Although all blockchains are now decentralized, as of January 09, 2021. Cardano to this day is the most decentralized blockchain in the world that has surpassed the Polkadot. Its 69% total circulating supply is now placed at stake. Cardano is now competing to create their digital identity. Although a framework for most decentralized cryptocurrencies requires several metrics to be fulfilled. A common way to determine how many blocks would be required and what makes the overall block more tightly knitted. Bitcoin has approximately 15,000 plus nodes, that are active, and bigger in number than Ethereum. In a decentralized system, there are higher chances against the issuance of immutable code to supplicate any cryptocurrency. There are more chances for one-to-one interaction and removing any third party in between in a decentralized system. In short, a decentralized system provides safety, security, and a non-intermediary system.
Most Decentralized Crypto
The world of crypto is flourishing and making leaps and bounds in terms of technological advancements with time. As per a recent survey, there is not one most decentralized crypto. There are numerous that provide a full-fledged, decentralized crypto environment. One of them is Tezos (XTZ). Tezos is based on smart contracts and is like Ethereum in structure and form. Tezos uses the Liquid Proof of stake (LPoS) apparatus as well as consensus. Tezos offers anyone the chance to be a validator. For Tezos, a validator is also called a ‘Baker.’ The Baker is required to stake at least 10,000 Tezos with the network. Just like Ethereum, any baker can make changes to the blockchain such as modifications, addition, or upgrades. Any modification done in this aspect is first approved by 80% agreement from the remaining blockchain termed as a supermajority. The changes are uploaded on the mainnet with further voting approvals. Some people do not want to stake their tokens but wish to be part of the development or modification and can take part in governance by simply voting.
Summing Up Decentralization
When it is about making decentralization the top priority, there is no specific metric. What value more is the throughput time and lower transaction fees, as well as the creation of smart contracts. The yardstick of decentralization should be kept aside and performance, as well as fortitude of the project, should be kept as an investment indicator. In the coming decades, transactions per second (TPS) and more well-maintained technology for blockchain would become the key performance indicators for investors.
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