Since starting my career in blockchain, I have been constantly asked about what decentralization truly means for blockchain. Many people consider it as a nature or principle in the overall system design. Some people regard it as a slogan chanted by crypto folks. Other folks simply dismiss it as a way of anti-government.
As a long-time practicer (thinker & doer) in the blockchain space, I feel the urge to explain blockchain decentralization in details to the public to dymisfy as well as un-demonize it.
Blockchain decentralization can be found in differently layers of any general blockchain technology as shown in the following diagram.
From the bottom layer, i.e. the network layer, blockchain adopts the Peer-to-Peer (P2P) networking technology (usually `libp2p` based) and is 100% decentralized in terms of its design and implementation.
On top of the network layer is the consensus layer which governs a distributed ledger shared amongst all network participating P2P nodes. There are many types of consensus algorithms and may be more to come in future. However, achieving a pure decentralization is hard. POW (Proof of Work) is so far generally considered achieving more decentralization than other algorithms like PoS( Proof of Stake) or DPoS (Delegated Proof of Stake) But in my view, there can never be a pure decentralization implementation in the consensus layer due to the economy incentive driving factor and big capital always wins in the end.
Further above the consensus layer is the transaction layer by which users modify/update the shared ledger through submitted transactions digitally signed by individual users each time. Since the signing key belongs to the end users and no one from the “central” could control or alter such transaction processing logic like fabricating transactions for end users.
At the top is the tokenomics layer as each public blockchain issues their native coins as an incentive mechanism to network or node operators (also a.k.a. validators, producers, miners) However, some coins like bitcoin are issued in a pure decentralization manner, i.e. there is no or only a very small percentage of pre-mint coins and the rest must be “mined” in each new block till the exhaustion. There are also a lot of pre-mint coins that are initially highly centrally controlled by some party or even person(s) and it is up to them to whether or not follow the blockchain whitepaper they published in the process of distributing the coins. Usually things go sour with premint coins as most people tend to be more greedy than should not be.
