Decentralization

Decentralization is the process of distributing control away from a central authority to multiple, independent entities. Bitcoin is an example of a decentralized system because no single organization controls the network. Instead, thousands of nodes around the world share the responsibility of maintaining the network and collectively agreeing on any changes. On the other hand, an example of a centralized system is the U.S. dollar, which is controlled by the U.S. Federal Reserve System.

Decentralization offers several key benefits to Bitcoin. Firstly, by distributing control across a network, Bitcoin is less vulnerable to malicious attacks as there is no single point of failure. Secondly, each node in the network has a copy of the blockchain, the public ledger where all Bitcoin transactions are recorded, ensuring transparency and trust. Thirdly, decentralized systems, which are accessible worldwide, enable individuals without access to traditional financial systems to participate in the global economy.