A Complete Guide To Decentralization In Blockchain

Add3, Content

April 22, 2024

10 min reading

In the ever-evolving technological landscape, the concept of decentralization has emerged as a game-changing card. At the heart of this transformation lies blockchain technology the bedrock of the web3 vision: give users more control over their data. 

In this article, we will dive deeper into the core principle of blockchain: decentralization. We will highlight the importance of decentralization in Blockchain. We will also classify the types of blockchain and its subcategories based on the degree of decentralization. Then we will compare the Blockchain decentralized and centralized approaches. And we will explore how industries are implementing blockchain in their solutions.      

Fundamentals snapshot :

Crypto, Blockchain, and decentralization are concepts that often go hand in hand and are closely interconnected.


In a nutshell, cryptocurrencies are an important application of blockchain technology that embodies decentralization by removing the need for centralized financial intermediaries like banks. 

Key concepts of decentralization:


Why decentralization is important in Blockchain

As for decentralized systems, a decentralized blockchain network operates in a peer-to-peer architecture. Therefore, nodes communicate directly with each other, eliminating the dependency on an intermediary or a central server. 

But what for?  

The decentralized aspect of blockchain ensures a secure, immutable, and transparent recording of data and transactions.

 i: Encryption: is a mathematical process that turns human-readable data into a set of values that seems random. Only the authorized parties can decrypt it using a cryptographic key approved by both sender and receiver.  


At this point, you can see the high importance of decentralization in blockchain (hopefully) 

But does that mean that all blockchains are decentralized? 

The answer is No. There are 3 types of blockchains.  

The 3 types of Blockchains:


1- Private blockchain: it is a fully centralized network that is managed and controlled by one single authority. Wait, isn’t it against the fundamental principle of blockchain? Well, Yes! But think about it this way: consider a company that is conducting an internal voting, of course, a private network will be its best fit.


2- consortium blockchain: it is a partially decentralized network since it is managed and controlled by a group of predetermined nodes. For instance, in a supply chain that involves multiple companies (manufacturers, suppliers, and retailers), a consortium blockchain would enable each of the participants to track and manage their goods. It improves transparency, traceability, and efficiency throughout the supply chain management process.     

The subcategories of decentralization in blockchain: 

Decentralization can be categorized into subcategories based on the degree or aspect of decentralization. These subcategories highlight the many dimensions of successful decentralization. This section, emphasizes the diverse ways in which decentralization can manifest within blockchain networks.


i: Smart contract: a self-executing contract with predetermined terms of agreement between two parties written in lines of code. It is a fundamental concept in blockchain technology, ensuring an automatic execution and verification of the contract conditions. Add3 can lend a hand by providing you with standardized smart contracts. Learn more. 

Centralized vs. decentralized blockchains:

As you can see, choosing between decentralization and centralization depends on the nature of the organization and its specific goals, taking into consideration the pros and cons of each.

Centralized blockchain



Decentralized blockchain



Decentralized blockchain use cases: 

The potential of blockchain goes way beyond cryptocurrencies. Its ability to ensure a secure, immutable, and transparent recording of data and transactions streamlines the efficiency of a wide range of businesses across a variety of industries. 



As we conclude this guide, it is clear that blockchain is reshaping the future of a wide range of industries. It represents a shift in business processes. Its decentralized aspect empowers secure transactions, records management, automated processes through smart contracts, and reduced costs through the elimination of intermediaries fees. 

However, it is important to note that, while implementing blockchain to your solution, it is needless to code everything from scratch. Unleash the power of no-code, and increase the scale of creation and innovation! Add3 provides you with standardized and pre-audited smart contracts.