Decentralization is a concept in organizations/technology where the power to make decisions is not limited to a governing authority but is distributed among the users thus making the platforms work more on a user inclined agreement rather than the decisions based on a central body, this ensures a flexible approach to solving problems pertaining to the tightly coupled centralized working.

Contrary to the limitation of department-specific work in centralized organizations, decentralization opens up a wide variety of levels to work on. It promotes an independent and efficient way to solve existing problems and helps in exploring one’s potential to the full extent.

Types of decentralization-

There are basically three main types of decentralization-

Government decentralization-This is further sub-divided into 5 categories-Political, Administrative, Fiscal, Market, Environmental.

Ideological decentralization– Further sub-divided into Libertarian Socialism and Free market.

Technological decentralization– Further sub-divided into Information technology and Blockchain technology.

Now coming to the question, as to why decentralization is so important in today’s world?

As we see a great boom in internet usage across the globe and the use of various platforms in order to stay connected or spread/gain information on various topics, it is important that the platforms being used to do the same do not enforce unnecessary censorship and the information is available to everyone. With the help of decentralized platforms, we can ensure that information is not manipulated or influenced in any way and is readily available to everyone.

One of the most important aspects of decentralization is that it helps break the prevailing monopoly of centralized organizations, which is the need of the hour. It keeps the centralized organizations in check and paves way for multiple ventures to flourish together.

Another benefit of using a decentralized structure is that it helps in breaking the trivial chain of decision structure, instead promotes independent decision which helps in making changes or solving problems quick and efficient. It also lowers the risk of making mistakes as people from any level of the organization can come up and decide to make required changes. Also since making changes are open to everyone, it helps in making constant changes to improve the services.

Decentralization gives a huge authority over their data and assets. Decades of dependency on third-party organizations have given a huge rise in people losing their authority over their assets and have to agree to each and every terms and condition as laid out by the organization in order to use their services

As we know that every coin has sides, the same goes for decentralization. So let’s look at some of the major disadvantages

One major disadvantage is that the group of peers of a given network with ill intentions might come together and create great damage and havoc. Thus stability is one of the biggest concerns in the case of decentralizing services. Although the probability of occurrence of such incidents is very rare there’s always a possibility. Another problem is that there might be inconsistencies in the organization which would make coordination difficult .

Decentralization can apply to most technologies and organizations but it might not be as efficient as centralized technologies in some cases, this leads to an exponential increase in operating costs. Therefore, we can sum up the disadvantages of decentralization: lack of uniformity, costly sometimes, coordination, and adaptation problems.

Now let’s look at one of the sectors where people have come across decentralization-

One of the sectors which has seen a great exposure to decentralization is the financial sector in the form of cryptocurrency. Although being in an early stage it has managed to attract the attention of millions of people and has also made people aware of the need and benefits of decentralization in certain sectors.

The way in which decentralization is used in the financial sector is by the use of blockchain technology which is in turn based on various algorithms and cryptography. Bitcoin is said to be one of the earliest implementations of blockchain technology which when clubbed with consensus protocol helps in achieving transactions without the help of a third party. You can read the bitcoin whitepaper here.

Decentralization is one of the best ways to have a trustless environment without losing on the part of efficiency. One such example is the use of smart contracts which provide a pre-defined set of rules for a given case, thus removing the use of a third party and still ensuring efficiency. It would be fascinating to see a big change in the administrative process in the coming years, which would include the usage of technologies based on decentralization.

Challenges faced while developing decentralized services-

One of the biggest challenges while making decentralized services is to develop a sustainable incentive model. As in the case of cryptocurrencies which have a very good incentive model thus making it sustainable till date.

Decentralization as foundation of innovation for future

One of the best benefits of decentralization is that it doesn’t curb one’s talent due to one’s position in an organization. Contributions at any level will surely give a huge boost to innovation. Finally, common people will be able to see a future in which they can make bring about big changes using their creative skills.

Efficiency achieved by decentralization

Apart from establishing an environment in which people can co-ordinate and work, decentralization is also the best in controlling emergency situations where certain actions need to be taken immediately also it provides relief to the head offices and some senior managers to work on future strategies rather than worrying about every small problem, this also helps the sub-ordinates in getting many opportunities and explore new fields.

Conclusion to decentralization

In conclusion, we can say that decentralization is one of the best ways to achieve speedy decision making and in bridging the gap between seniors and their subordinates in organizations whereas helps people to gain more custody over their assets using decentralized technologies.The blockchain technology used in the financial sector in form of cryptocurrency has managed to be the center of attraction for displaying the benefits of decentralization and how one doesn’t need to depend on third-party services like banks to store or transfer amounts. As we see an immense increase in decentralization and blockchain technology we can be quite certain that the future will be decentralized.