Decentralisation in Blockchain
Decentralisation and its Benefits
If you have entered the world of blockchain, you will frequent the word decentralisation. Decentralisation is not a new concept as it has already emerged with the release of bitcoin back in 2009, conceptualising bitcoin technology. Transactions are verified with the use of consensus algorithms and not a centralised entity. The bitcoin network is connectable by anyone which makes it open and transparent where anyone can verify any transactions.
Decentralisation basically refers to the transfer of control and decision-making from a centralised entity (individual or organisation) to a distributed network. Therefore, eliminating the need for trust between network members as no one can exert authority over others, upholding the functionality of the network. Their benefits include the following:
Providing a trustless environment — Since everyone has the exact same copy of distributed ledger, no one has to know or trust anyone else. New data will only be added after group consensus i.e. every member in the network has to agree. Any alteration or corruption of a member’s individual ledger will be rejected by the majority in the network.
Improving data reconciliation — When companies and their partners use different central entities to exchange data in centralised networks, there will be chances of data loss or incorrect data. However, in a decentralised network, control is with everyone and they have access to a real-time, shared view of the same data.
High flexibility, security and scalability––Since there is no reliance on specific actors, points of weakness in systems will be significantly reduced and there will not be any single point of failure. They can still operate even if one master node is compromised resulting in high fault tolerance. Security increases as network members increase. Scalability will also increase as one can add more devices to the network to increase its computing power without fully shutting down the network.
Centralisation vs Decentralisation
As opposed to a decentralised network, a centralised network is maintained and controlled by a central entity. Efficiency is the primary advantage for centralised network. Since all key network functions are managed through a central location, it is easy to maintain resources. Centralised network also makes it easier to provide a consistent user experience because the network environment is stable and predictable. Also, since all connections only go through the main server, speed and performance are improved.
On the downside, however, centralised networks are low fault-tolerant. All data must pass through a single location, so if that central server goes down for any reason, it will likely take the entire system down with it. This results in low security as it will be a tempting target for cyberattacks. It can also lead to a massive slowdown if the network doesn’t have sufficient bandwidth to handle user activity.
Centralised networks have been involved actively in our daily lives from the bank where we deposit our money to our social media such as Facebook and Yahoo. The table below shows a summary of the key differences between Centralised and Decentralised Networks.
Despite having numerous benefits, decentralised networks also have their disadvantages. Resources are owned and shared by network members and therefore difficult to maintain since no one actually owns it. Any meaningful change requires updating every individual node. Since the distributed nodes have different latencies and do not follow a common clock, network administrators cannot order commands or logs. As a result, it can be difficult to design and debug algorithms. These result in high maintenance costs.
When a decentralised network has more network members, the speed and performance slow down as each and every member node must validate all data being added to the ledger. Also, there will be issues in coordination. In the absence of a node hierarchy, there are no superior nodes overseeing the behavior of subordinate nodes––consequently, there is no way to regulate individual nodes on the system. It can therefore be difficult to make timely decisions or achieve large-scale tasks. This decentralized chain of command can be an insurmountable issue for certain businesses and organisations. Furthermore, since it is difficult for any individual node to gain a global view of the entire network, it is thereby harder for individual nodes to make well-informed decisions based on the state of other nodes in the system.
Decentralisation should thus only be applied where it makes sense and not just because it is a blockchain application. After all, one would argue that private blockchains are actually centralised since they are made up of parties whose identities are known. Only credible and reputable participants can post to the ledger. Because participants’ identities are known, their transactions can therefore be audited.
Digital Marketplace Decentralised
The development of marketplaces that link buyers and sellers is one of the most popular DeFi (Decentralised Finance) use cases, relying on smart contracts to enable direct exchanges without having to go through an intermediary or a broker. It helps sellers access global markets without being subject to brokerage fees from companies like Amazon and eBay. There are also special interest markets for collectors and investors, notably in the art world. Those who are unbanked in developing countries can also be reached since payment is done in tokens.
Be sure to keep an eye on Mars Panda World as we will be launching the Testnet of our decentralised NFT Marketplace soon this month!
About Mars Panda
Mars Panda is a complete eco-system which consists of:
• Games, Social Media and Ecommerce Aggregation
• Yield farming DeFi
• Mars Panda game with NFT game elements
• NFT Marketplace
We aim to fuse mainstream eCommerce and Gaming to the crypto world of NFTs and DeFi, on one seamless, unified platform.
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Legatus Global Pte Ltd is an entity that has obtained a regulatory exemption under the Payment Services Act (“PSA”) for digital payments token services. Legatus Global is commissioned to handle the issuance of Mars Panda Token (MPT) as well as the KYC/AML during the private sales and distribution of tokens to private investors. Legatus Global is also handling the process for private sales and distribution.