I would like to write about centralization and decentralization in this article. Decentralization is the future — Busy technology is going to bring decentralization to the e-commerce sector, at first to the freelance. But to start from the beginning, the basics need to be explained…
Centralization vs Decentralization?
The definition of the word centralization and decentralization can be easily guessed, however, the concept is nuanced and takes some time to understand the costs and benefits of decentralization.
Decentralization is a concept in politics, business, technology, and other fields. In a nutshell, it means a central authority doesn’t have control over a system, but control is distributed among the participants in the system. For example:
- A centralized technology system has a central authority with most (or all) of the power. In a decentralized technology system, the power rests closer to the users and multiple network nodes.
- A centralized business structure has a central authority with most (or all) the power. In a decentralized business structure, the power to make decisions is distributed between individuals and teams.
The centralized approach allows for more rapid and decisive decision-making, as well as giving participants in the system a sense of clarity about the rules and their own role within them. It also sets up a structure to enforce those rules.
Unfortunately, this also highlights one of the primary drawbacks of centralized systems:
What if the central authority acts in ways that are harmful to the participants in the system?
There are innumerable examples of tyrannical governments abusing their power. There are also many examples from e-commerce where users are enforced to act as per their guidelines. All available freelance e-commerce models include some kind of fees either for a membership or a percentage from a profit. Platform “owners” have the ability to suspend accounts, delete offers, intervene in agreements, and other centralized options.
Decentralization avoids the abuse of power from central authorities. However, this comes at the cost of every participant taking on some responsibility themselves.
When I speak about the Busy being decentralized, I am specifically referring to the architecture of the technology and platform itself. There will be no central point of control in the Busy, unlike Fiverr or UpWork. All participants in the network will have equal power and will not be forced by anyone else to do anything. This is radically different from the standard centralized model of e-commerce, and it has both costs and benefits.
Busy — The Decentralized Blockchain Crypto Freelance Platform
Beyond just being able to use cryptocurrencies easily, decentralization is what allows for all of the other benefits of the marketplace, such as:
- There are no fees to use the platform.
- There is no central authority collecting data.
- There is no central authority able to take down a platform or force a user to follow their terms and conditions.
- Users have total control of all of their trade.
Centralized marketplaces can’t offer these guarantees because their revenue models require that they do things to impose on users in one or all of these areas.
- If they didn’t charge fees, they’d need to monetize with user data.
- If they didn’t want to monetize user data, they’d need to charge fees.
- If they didn’t censor transactions and takedown stores, they’d be forced to do so by governments (or be shut down themselves).
There’s really no possible way to run a permissionless marketplace unless it’s based on decentralized architecture.
On the internet, everything you see is based on files that “live” on a server somewhere. A server is just a name for another computer. Most servers are owned (or rented) by the central authority that runs the website you’re visiting, usually a company. When you use for example Amazon for shopping, you are connecting to Amazon’s servers, just like everyone else using Amazon. This is a centralized system.
The decentralized solution means that computers aren’t connecting to a central location. They connect directly to each other. Basically, each user becomes their own server.
This is one of the costs of using a decentralized system. Each participant in the decentralized system takes on some of the power that the centralized authority would normally have, which leads to the benefits mentioned above. It also means that they will have to take extra steps they wouldn’t need to take in the centralized system. In the decentralized political or business structure, this might mean that people are forced to direct themselves instead of just taking orders. Their success or failure is then dependent on their own actions instead of the decisions of the central authority.
In a decentralized blockchain network, it refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network. Decentralized networks strive to reduce the level of trust that participants must place in one another, and deter their ability to exert authority or control over one another in ways that degrade the functionality of the network.
Centralized systems are abundant and widely used for e-commerce today. A usable decentralized freelance e-commerce model didn’t exist, until now. The Busy technology brings an innovative and unique solution based on its own blockchain.
So what are the benefits of decentralization?
Provides a trustless environment
In a decentralized blockchain network, no one has to know or trust anyone else. Each member in the network has a copy of the exact same data in the form of a distributed ledger. If a member’s ledger is altered or corrupted in any way, it will be rejected by the majority of the members in the network.
Improves data reconciliation
Companies often exchange data with their partners. This data, in turn, is typically transformed and stored in each party’s data silos, only to resurface when it needs to be passed downstream. Each time the data is transformed, it opens up opportunities for data loss or incorrect data to enter the workstream. By having a decentralized data store, every entity has access to a real-time, shared view of the data.
Reduces points of weakness
Decentralization can reduce points of weakness in systems where there may be too much reliance on specific actors. These weak points could lead to systemic failures, including failure to provide promised services or inefficient service due to the exhaustion of resources, periodic outages, bottlenecks, lack of sufficient incentives for good service, or corruption.
Optimizes resource distribution
Decentralization can also help optimize the distribution of resources so that promised services are provided with better performance and consistency, as well as a reduced likelihood of catastrophic failure.
I hope that the difference between centralization and decentralization is now clear out and why decentralization is the future. Next time, I will write about blockchain itself and why it makes the difference. Stay tuned!
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If you are interested in the Busy solution, check our website https://www.busy.technology.