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Centralized vs. decentralized digital networks: Key differences



A decentralized digital network is not controlled by a central authority.

Instead, control is distributed among its users. There is no single server or point of command. Rather, the network is run on a peer-to-peer basis, with each user wielding equal power and responsibility.

A great example of a decentralized network is the internet, itself, which is not controlled by one authority. Rather, it is distributed among its users. However, some argue that the internet is moving toward centralization due to the monopoly of big names within the space—Google, Facebook, WordPress and the like.

How so? Data is concentrated within these big players’ servers. As such, everything one needs to access online goes through any one of them. So to answer the question, “Is the internet centralized or decentralized?” 

Technically, it’s decentralized, but the argument that it is slowly but surely becoming more centralized cannot be downplayed or understated.

Another example is Bitcoin (BTC), the first cryptocurrency. Bitcoin’s network architecture was born after the Great Financial Crisis of 2007–2008. Briefly put, Bitcoin was launched as a decentralized network precisely because centralized institutions (banks, financial firms) “had failed the people.”

The creator(s) of Bitcoin realized that if a single point of control or failure exists, the entire financial system is at risk. Therefore, they designed Bitcoin to be decentralized and distributed. No single entity or group controls it. Instead, it is managed by its users.

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