Image taken from a post by cryptocrown via Steemit

Bitcoin has been in the news since the early part of this decade, for reasons both good and bad. Recently, it has been in the news for its diminishing value, where it has plummeted to new lows in spite of being a formidable currency in the world of cryptocurrency.

Bitcoin and Blockchain technology were introduced to the world by an individual or group individuals known as ‘Satoshi Nakamoto’, with the idea of a peer-to-peer network sharing protocol with decentralization being the core concept. This not-so-new term may confuse some investors, so let’s find out what decentralization actually means.

What is Decentralization?

Decentralization is the core concept behind the advent of blockchain technology (though there are centralized blockchains, with permissioned and permission-less networks).

Decentralization basically means that this technology is not dependent on a central authority or point of control. It works in such a way that the data of every user and transaction is stored and recorded onto a distributed (decentralized) ledger. Decentralization also validates the authenticity of the data through mutually agreed protocols.

To understand why decentralization in blockchain technology is a game-changing concept in the world of digital communication and transactions, we have to look at certain key features that can be considered as merits of the notion and underlying technology:

1. Zero Fraud

Decentralization means the absence of a central authority governing the blockchain protocol. This brings a lot of transparency among users as every node is treated equally where each transaction is verified by all the individual nodes before being recorded on the blockchain — which, in this case, is an open source ledger. Transactions being entered into such ledgers are monitored and checked for their integrity by various miners. This ensures zero scopes for any duplication of currency.

2. Absence of Government Intervention (In mining Cryptocurrencies)

Constant interventions on part of governments have curtailed the development of their own fiat currencies. In the past, devaluations of various currencies have led to increases in trade deficits. Government interventions have contributed to a host of economic problems like hyperinflation, distortion of interest rates, tax hikes, etc. In the world of cryptocurrency, the scope for such problems is negated due to the absence of government intervention.

3. Low Transaction Fees

Transactions on the blockchain are instantaneous and are based on end-to-end user encryption which eliminates the costs associated with middlemen. There are transaction fees associated with Crypto-exchanges but it is negligible in comparison to traditional middleman fees. This helps reduce capital costs to a great extent.

4. Reliability

Blockchain can be used as the most reliable of technologies today, taking into consideration its fundamental attribute of decentralization. Unless the whole network gets compromised (which won’t happen since there is no single point of failure), this technology will remain as is, and record each transaction. If one node gets compromised, the other million nodes will record the data and update the system to safeguard its reliability.

5. All-Time Availability

Cryptocurrencies are accessible to users whenever they need them. One can transact with Bitcoin, and subsequent Altcoins, at any hour of the day if he or she wishes to do so. Unlike the system of banking, there are no public holidays. This solves the problem of liquidity to a great extent, thereby improving trading in general.

Why, then, do Governments and Centralized Financial Institutions oppose Bitcoin so much?

Readers must find themselves in a dilemma while reading on Bitcoin and other decentralized coins, that in spite of having such significant advantages — what would have propelled certain democracies to ban Bitcoin, and cryptocurrencies in general?

To put it bluntly, governments and centralized financial institutions oppose Bitcoin and other decentralized cryptocurrencies as their blockchains do not fall into the purview of their rules and regulations. These entities fear giving up institutional and monetary power, in a world where cryptocurrency will take over old and traditional fiat currencies.

Fiat currency is nothing but a piece of paper which holds a certain value and not backed by a physical commodity. The values are derived by the forces of demand and supply as opposed to the value of the material from which the money is made.

i) Collapse of the Banking System

If we adopt cryptocurrency as our medium of transacting while replacing traditional bills, the entire system of banking will collapse. The absence of banks or any other centralized financial entity will mean the absence of middlemen in transactions, in issuing financial services to those seeking it. This arrangement will not favor governments and other centralized institutions and may result in large-scale unemployment for the ministry.

ii) Reduction in Government Revenue

Replacing paper currency will result in a domino effect that will be felt by everyone in the mainstream economy. Reduction in institutional fees, as well as fewer receipts in taxes, will result in far lesser revenues for the government.

There are many more reasons as to why Democracies oppose Bitcoin. It is quite ironic how a system selected by the people would go against a system controlled by the people. To continue reading from the original source of the article, click here.