To Centralize Networks or to De-centralize Networks: That is the question!

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For anyone to answer this question will not only involve understanding the difference between the two but will require an understanding of what Blockchain technology is and how it is set to not only protect the public but potentially bring more freedom and access to wealth and prosperity to millions of more people worldwide.

When the internet was in its infancy well over 25 years ago, there was not a centralized system of communication between users. It was simply a world wide web that was able to connect individual computers to each other. This simply peers to peer. Although initially workable for basic communications it was not practical with the available technology at the time to confirm transactions of valuable consideration on a central ledger or have the control that governments and financial institutions needed.

By transactions of valuable consideration, we mean currency and other sourced documents that needed third-party confirmation that an agreement had been reached by at least two parties. One could send the money and wait for the receiver to confirm that the money was received. Same with documents and other sourced material of value.

As the internet evolved, the concept of a centralized network prevailed and is in use today. By a centralized network, we mean that the individual computers or smartphones or tablets all process their data by means of a common computer server or I will call it a node. So the centralized network processes and routes the data through itself to the other user or users.

This advanced the internet to more efficiency and speed of processing transactions. However, this also lends the internet on a centralized network to controls by use of governments and financial institutions and hacks by scammers to steal personal and private information.  Simply just monitor or hack the centralized point. That is where we are today for the most part.

To maybe understand this, we will take a look at a simple financial transfer between two people using their each respective banks and doing a wire transfer. The centralized middle person would be a third bank called a settlement bank. So the flow of money would be from the payer’s bank through the settlement bank and then to the payee’s bank.

Technically, the settlement bank would lend the money to the payee’s bank because it would have received the promise from the payer’s bank that the money is available and will be sent. The settlement occurs as a debit and a credit with each bank with the settlement bank being the centralized third-party ledger processor.

Although this is a very simplified explanation, it is basically how money moves globally and how data moves in a centralized network. There is always a middleman (or Network computer) confirming the transaction or ledger so to speak.

Enter Block Chain Technology

The issue of confirming transactions or agreements through a bonafide ledger system is as old as humanity’s use of currency itself. In or around 2008, Blockchain technology was introduced with the advent of crypto-currency starting with Bitcoin. For information on how this started and its genesis is not the scope of this article, but the basic concept will be discussed.

With Blockchain technology there is no centralized system, but a very strong and unique way to maintain ledger accuracy and privacy at the same time. The basic premise of Blockchain technology is that it is not centralized at all.

Blockchain technology is a global connection of highly secure computers that are decentralized. They record transactions by a mathematical algorithm that a data miner wins on solving the mathematical formula. So the transactions are confirmed throughout the blockchain where it is known as a distributed database. It is truly a peer to peer ledger system that simply cuts out the middleman or the centralized node or bank. Since it is decentralized distributed ledger digitally with the solving of a mathematical problem, everyone agrees that the transaction took place.

No questions or concerns are raised. The transaction happened and is recorded forever on each ledger. This transaction is called a single Blockchain and is how digital currencies operate.  The need to centralize is no longer needed. This is a very disruptive type of technology that will upset the status quo and move people and countries away from the way we currently use the internet and provide a level of privacy, security, and anonymity that are unheard of today. At least that is the hope!

To fully understand this technology, one will need to go much deeper than this short article, but we encourage you to do so as it will be impacting your life in the future whether you understand it or not. We urge you to learn it now!

The problem with Banks and Governments!

With over 3 Billion users on the internet, and hundreds of millions of financial and document transactions taking place daily, having a centralized network is much more conducive to banks and governments.  The obvious reason is control, ledger control, and data mining control. When you hear of these types of entities say they are embracing “Blockchain” technology not only should you think of an oxymoron, you might think about how this is not even possible with the concept of a distributed ledger system.

For example, Bank of America is exploring using Blockchain technology as a way to store individual’s data on a single digital ledger. This, of course, defeats the whole purpose of a distributed digital ledger, but they managed to call it a “permission digital ledger” in their patent filing. A duck by any other name is still a duck.

If banks and governments cannot control trusted ledger transactions between people using the de-centralized network they start to lose their governance over people. So governments with the help and lobbying of the financial sector will do what they can to either regulate it or join it. They cannot stop it! It is a technology that is long overdue but will be embraced globally, especially by up and coming third world countries.

The benefits of using de-centralized networks such as Blockchain technology are almost limitless and the more you understand it the better you will be able to capitalize on your own personal enhancement in life.

Boyan Josic is the Managing Partner of Mogul Media and the founder of MarketMakers.io and JOSIC Media. An expert in the cryptocurrency market, Boyan also serves as an advisor to AERONVelix.IDCashBag, SignIX and Energy Premier

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