Should A Blockchain Be Decentralized?

If you read a lot about blockchain technology, you must have noticed a great deal of discussion about the coveted quality of being decentralized. Should a blockchain be decentralized?

It sure seems that way from how the concept of “centralization” is made out to be villainous and negative. How true is that perception? Let’s find out.

Decentralization versus Centralization in Blockchain: What Is The Big Deal?

Blockchain networks are often decentralized, like in the case of the Bitcoin blockchain. This means that there is almost no barrier of entry for anyone to join and become a part of that network.

A blockchain network is said to be centralized when it is specifically made to be private network, usually meant for enterprise use.

Here, the validation rights are restricted to certain nodes controlled by members of the organization depending upon their hierarchical responsibilities or access rights.

An example of this type of blockchain would be the IBM Hyperledger Fabric.

These two types have a lot of underlying similarities between the two kinds. Both are essentially distributed ledgers working within a peer-to-peer network. The participant nodes are all responsible for keeping the ledger up to date and secure.

Now, depending on whether it is a public or private blockchain, the access rights of the nodes will be uniform or hierarchical.

You May Also Read: Private Blockchain

Is Decentralized Better?

While decentralization is frequently treated as th holy grail of blockchain, it really depends upon the need that you are trying to fulfill.

For enterprise users, the goal is often to be able to customize a blockchain network. In that respect, a private blockchain that is quite centralized can be the best bet to go for.

By having a private blockchain like the Hyperledger Fabric, a company can manage its interactions with other companies and its own employees. Through the deployment of centralization, it makes sure that it can control who can view its data and how.

You May Also Read: How does Hyperledger Fabric Work?

Decentralization, on the other hand, is a necessity for large public blockchain, especially one that handles payments.

For these blockchain networks, security is of paramount importance.

Having a large number of nodes validate transactions within such a network according to one of the different consensus protocols in blockchain. This keeps a majority attack at bay by making sure nobody can make unauthorized changes to the ledger.

The higher the number of separate nodes, the greater the security. From that perspective, decentralized blockchain is definitely better and a blockchain should be decentralized.

Therefore, a blockchain should be decentralized only so far as it needs to prioritize its security as a public blockchain.

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