Decentralization
A definition of decentralization versus centralization and why most blockchains, and the NFTs that reside on them, are considered decentralized.
In the world of cryptocurrency, the word “decentralization” has become commonplace. It seems that most every crypto project that exists claims to be decentralized in one way or another. But what does it actually mean to be decentralized, and avoid processes that make a project vulnerable to centralization?
Definitions
Decentralization - a transfer of control over an activity or organization to several individuals, pools, or organizations rather than to a single one.
Centralization - the concentration of control of an activity or organization under a single authority.
With decentralized activities, decisions are delegated and distributed amongst participants rather than left for one authoritative source. Most blockchains are considered decentralized because they are often maintained and participated in by individuals who find strong value in sovereignty.
NFTs reside on blockchains, such as Ethereum’s, making them decentralized assets. Because every transaction on the Ethereum blockchain is verified and agreed upon by a distributed consensus, assets like NFTs can exist securely on the blockchain.
Learn More
Perhaps the best place to glean an understanding of what decentralization is (at least in the world of crypto), is with Bitcoin, the most robust and decentralized project ever devised. Our page on Blockchains explains how the Bitcoin network is decentralized and how it works!