Methods of decentralization

There are two methods that can be used to achieve decentralization. These methods are discussed in detail in the following sections.

Disintermediation

This can be explained with the help of an example. Imagine you want to send money to your friend in another country. You go to a bank that will transfer your money to the bank in the country of your choice for a fee. In this case, the bank keeps a central database that is updated, confirming that you have sent the money. With blockchain technology, it is possible to send this money directly to your friend without the need for a bank. All you need is the address of your friend on the blockchain. This way, the intermediary is no longer required and decentralization is achieved by disintermediation. However, it is debatable how practical decentralization is in the financial sector by disintermediation due to heavy regulatory and compliance requirements. Nevertheless, this model can be used not only in finance but also...