Basics: Decentralisation

Decentralisation

What does it mean to be decentralised?

One of cryptocurrencies greatest assets, and what is thought to be the basis for its creation, is its decentralised properties. Cryptocurrency was developed in a way requiring no authority to function. This is a significant departure from the financial norms we knew before cryptocurrency’s arrival. 

Traditional currencies, also known as fiat currency, have functioning models varying from country-to-country, but generally involve the policing of money through a major authority, usually a central bank. The bank has full control and adjusts a currency’s worth based on supply and demand, and inflation pressures, which can often work against the best interests of those using the currency.

Traditional currency is also represented in physical notes and coins, as well as through digital means such as bank deposits. However, despite the amount of physical currency owned, the value of the money owned by any one person is still determined by the central bank.

The decentralised model of cryptocurrency relies simply on supply and demand to determine value, which means no third-party can influence the value of the currency. 

This decentralised model for cryptocurrency is made possible by blockchain technology, which avoids the involvement of a third-party authorities by relying on peer-to-peer authorisation of transactions and making all accounts and trading public.


People can trade cryptocurrency with each other knowing the system and the funds they use are secure without having to rely on placing trust in a bank, a transfer sender or a recipient. 

One of the greatest real-world benefits to the cryptocurrency system is its lack of regulation and confidence brought by its inherent independence.

Cryptocurrency cannot be influenced by financial policies of countries, the performance and policies of banks and fluctuating levels of inflation and deflation.
While some cryptocurrencies have evolved to adopt different models, most have their value determined by the simple laws of supply and demand.

This P2P system not only removes the requirement of banks to confirm and process fund transfers, but it eliminates the fees banks require to perform these actions

What are the benefits of decentralised currency?

One of the greatest everyday influences governments and banks can impose on currency are tariffs, fees and limits, charging, regulating and monitoring how people spend their money.

This is a norm now questioned by millions, as the arrival of cryptocurrency brings a possibility of an end to almost all limits imposed on transfers.

Users also enjoy everyday benefits of using a borderless currency, offering comparatively cheap international transfers and no spending limits. No country-to-country exchange rates and tariffs mean anything purchased internationally retains its value.

Shorter-term cryptocurrency investors and users tend to be most attracted to the independent verification system decentralisation relies on to transfer funds. However, there is value in the system for everyone, especially with the advent of wider for accessible use of cryptocurrency for everyday use.

Perhaps most impressive among a long list of decentralisation benefits coming with cryptocurrency’s use of blockchain technology is its mass public self-policing of transfers. The ledger is available for all to see, so all transactions ever completed on the network are publicly viewable.

This means users have a vested interest in maintaining the credibility of the system. This method of utilising multiple verifiers is a much more secure and sure proof of transferring funds than relying on a single third-party entity.

Basics: Decentralisation

FAQ

Who runs cryptocurrency? 
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One of cryptocurrencies greatest assets, and what is thought to be the basis for its creation, is its decentralised properties. Cryptocurrency was developed in a way requiring no authority to function. This is a significant departure from the financial norms we knew before cryptocurrency’s arrival.

Is cryptocurrency regulated?
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One of the greatest real-world benefits to the cryptocurrency system is its lack of regulation and confidence brought by its inherent independence. Cryptocurrency is designed to be resilient to influence by financial policies of countries, the performance and policies of banks and fluctuating levels of fiat currency inflation and deflation. While some cryptocurrencies have evolved to adopt different models, most have their value determined by the simple laws of supply and demand.

Why are cryptocurrency transactions available for public view?
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Cryptocurrency’s use of blockchain technology means it utilises a mass public self-policing of transfers. The ledger is available for all to see, so all transactions ever completed on the network are publicly viewable. This means users have a vested interest in maintaining the credibility of the system. This method of utilising multiple verifiers is a much more secure and sure proof of transferring funds than relying on a single third-party entity.

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