8 Benefits of Decentralization in Blockchain

8 Benefits of Decentralization in Blockchain

Bware Labs Team

9 min read

Decentralization has many benefits like composability, immutability, and security which also translate into benefits for society, economics, and politics.

We’re at the bleeding edge of Web3, pushing for a more decentralized world. As part of our efforts, we’ve recently started the testnet phase for a decentralized version of our API platform Blast, and now have some fresh insights into the benefits of going decentralized.

In today’s blog piece, we’re delving deep into the advantages of decentralized infrastructure, and what decentralization means for society as a whole. Towards the end, we’ll try to answer some FAQs straight from the minds of Web3 enthusiasts.

But first, have you ever wondered what the big deal is with decentralization?

Why Does Decentralization Matter?

In today’s Web2 world, most of the things you can do online have some sort of backdoor to a privately-owned server. Most apps run on a pre-existing infrastructure, either controlled by a single entity or spread out across a network that itself is owned by the provider.

The result? A small number of entities hold control over our internet activity. If one of these entities fails, everyone suffers. We saw this recently with the Facebook Outage of October 2021 and the Googlequake of August 2022. Livelihoods that rely on these Web2 platforms operating normally were upturned, and these are simply the latest big examples.

Furthermore, because of their centralized infrastructure, many big Web2 companies have access to our personal data, bank accounts, healthcare information, and more. We’ve become so accustomed to a centralized internet that it’s difficult to imagine life without it.

When the technology itself is more conducive to stasis than movement, that’s a problem.

Moxie Marlinspike, Founder of Signal

That is why a decentralized Web3 future has so much potential. For example, decentralized finance already helps bypass traditional banking limitations, paving the way for more innovation with better security, increased transparency, and smart contracts.

Main Benefits of a Decentralized Infrastructure in Blockchain

Truly decentralized infrastructure is rare because of the world’s inherent tendency towards centralized platforms such as Infura or OpenSea. However, our efforts here at Bware are firmly in the opposite direction. That’s why we’re insistent on making Blast API fully decentralized, so everyone can share the following benefits without having to go through a centralized platform.

1. There is no single point of failure on the network

One of the most popular benefits of decentralization is the lack of a single point of failure. By its nature, decentralized technology is managed by a shared network of actors that cannot be controlled or shut down by a single node.

So if there’s a point of failure, all other participants will make sure the network stays up, and the application keeps running as smoothly as always.

However, decentralized infrastructure is necessary for this benefit to be true. Without it, platforms that are still essentially Web2 can hold control over vital points. When this happens, we’re essentially back to a mix-and-match of Web1 and Web2 that somehow has the worst elements of both: people don’t want to run their own servers, which leads to a need for platforms, and those platforms run on old, centralized models, which creates single points of failure. A famous example would be Infura changing some configurations that resulted in Metamask becoming unavailable in Venezuela.

2. It allows for better distribution of resources

Web3 apps that use decentralized infrastructure should ultimately be able to provide higher reliability and accessibility to shared resources. Their services are also delivered as promised with data ownership and egalitarianism in mind.

The issue that comes up with resource distribution in a decentralized system is whether participants are more or less likely to go fully decentralized.

Since Web2 was the norm for so long, it’s easy to fall back on some form of centralization because of convenience, because it’s necessary, normal, or expected and at the same time performance is harder to achieve with Web3. These decisions harm the optimized resource distribution that decentralized infrastructure provides.

3. Allows full control over interactions on the blockchain

Web3 devs who use a decentralized infrastructure stack don’t have to go through centralized actors to seek access or get permissions. They’re allowed full control over their interactions on the blockchain, and nobody else has any level of access or control over them unless expressly provided.

Without centralized actors to go through, Web3 apps become more user-centric. With decentralized infrastructure, the likelihood that someone or an entity can own your data, restrict access, or cause catastrophic failures on a global scale is negligible.

4. Security gets even better with the number of members on the network

Beyond the lack of a single point of failure, decentralized infrastructure also means those points of failure will multiply based on the number of members on the network. This essentially means resiliency increases exponentially based on adoption. So the more people using a specific network, the more resilient it is.

Think of the classic Bitcoin example: if someone wants to hack the network, they have to hack over 50% of all nodes in order to cause a catastrophic failure. Every app is theoretically more difficult to compromise if it relies on decentralized infrastructure.

Let’s take another example: since one of Ethereum’s main infrastructure providers is Infura, the 2020 Infura outage was unsettling for many ETH users, even going so far as to raise questions over how decentralized blockchain really is. This wouldn’t have happened if users weren’t relying on a single, centralized infrastructure provider but instead were using a decentralized one such as Blast or Pokt Network.

Decentralized infrastructure, therefore, helps apps and devs stay true to the defining concept of Web3 — a decentralized internet — and bypasses the need for solutions that are more likely to create security vulnerabilities.

5. Allows Web3 Devs complete freedom in selecting and assembling app components

Another unique facet of decentralization is the level of composability you can achieve. While traditional apps limit you to a specific set of components, the composable architecture gives you the freedom to pick and choose what you want to use.

This is fundamental to Web3 and one of the reasons why it’s so revolutionary. Once upon a time, networks were closed, and you could only operate on one. Decentralized infrastructure enables your software to be interoperable through:

  • Syntactic composability, which means devs can connect components from a variety of new systems, with all the open-source elements of a product working independently to handle different tasks. Example of syntactic composability: Ethereum.
  • Atomic composability, which is a mix between atomicity and composability, essentially means one blockchain transaction can involve multiple smart contract calls. The atomic component comes into play when one of those calls fails, causing the entire transaction to fail. Flash loans are the classic example of atomic composability since they involve multiple calls to different platforms performing diverse sets of tasks, all interdependent.

6. Everyone has access to the latest data in real-time

Imagine you’re working on a document with 20+ people across different companies, departments, networks, or systems. Normally, you’d have to validate the data repeatedly to ensure that it stays up to date at all times.

Decentralization enables something known as data reconciliation. Imagine that instead of dealing with conflicting data, loss of data, or other common issues, you have a single, real-time shared view of your data. And not just you, every other stakeholder does too, and you can work on the latest version together without any transfer risks.

7. Working in a trustless environment increases security

How many times have you had to blindly trust other parties during software development? Consultants, agencies, partners, corporate entities — when the chain of trust becomes so long that you don’t even know who has access to a piece of code anymore, you have a problem.

Web3 development solves that issue inherently. The decentralized nature of the environment means nobody knows or trusts anyone else. The ledger gives all participants an exact copy of the data, and if something’s off with a member, everyone will reject that member.

No possibility of cover-ups, or corruption, just a built-in lack of trust since anyone can be a bad actor, and everyone recognizes that. Having such a trustless environment significantly boosts security for everyone working on the decentralized blockchain network.

8. Immutable structure that guards data once it’s stored

The groundbreaking aspect of blockchain also stems from the append-only data structure. Once information is stored on a network, nobody can modify it. While in some cases, this might prove counterproductive, in cases such as Bitcoin or most Web3 apps, this is the reason why they’re almost impossible to hack.

Every action, every transaction, and every interaction on a blockchain network receives a timestamp and is cryptographically secured through chronological hashing. This eliminates the possibility of altering past records because those updates and their actors would be immediately rejected as per the rules of a trustless environment.

That’s why truly decentralized infrastructure is necessary. A centralized app built on top of the blockchain makes no sense and is not worth the hassle. At the same time, an application is as decentralized as its most centralized point, so if you don’t pay attention to the type of API provider you are using, the consequences might become irreparable for your users.

More Benefits of Decentralized Systems

All the benefits above lead to some broader advantages of Web3 apps. Web3 enthusiasts, developers, and investors like to say how revolutionary these advantages are, sometimes very enthusiastically. But rightly so, since Web3 apps have a wide range of economic, social, and political benefits that are intrinsically connected to decentralization. Let’s explore some of them here:

  • More room for checks and balances. Traditional governmental systems are centralized, which can be counterproductive to social growth. The basis of democratic government is a system of checks and balances, and using decentralized infrastructure for these systems could lead to significant improvements in society as a whole.
  • Less censorship. Political systems all over the world have historically abused their power and censored their citizens’ access to the internet, to certain websites such as Twitter, or to specific types of content. On a decentralized network, that type of censorship becomes infinitely harder to achieve.

Instead of putting an end to wrong ideas, censorship often makes it harder to fight them. That’s why spreading the truth will always be a more efficient strategy than engaging in censorship.

Pavel Durov, Founder of Telegram

  • Gives a voice to people close to a problem. In a Web3 world, focusing on the issues at hand should be much easier without the noise that centralized systems often incur. As such, systems immediately become more meritocratic as knowledgeable people closest to the issues are given the biggest voice (since their opinions are the most relevant).

FAQs about Decentralization

Why is decentralization necessary?

Answer: The world is full of Web2 platforms and other centralized systems that seem stuck in the past, and user data is still being used as the currency. With decentralization and the advent of Web3, we could be looking at a significantly more equitable society while optimizing our internet and app usage.

Who benefits from decentralization?

Answer: It would be easy to go into an “us vs them” discussion, but the truth is the entire world benefits from decentralization, regardless of social status, income, geolocation, nationality, ethnicity, profession, or age. In truly decentralized systems, none of those things matter unless explicitly mentioned.

What are the disadvantages of decentralization?

Decentralization isn’t a one-size-fits-all solution. In many cases, centralized systems are preferable because of the need for accountability, transparency, or other industry-specific factors. Decentralized apps can be costly, hard to build, and sometimes very difficult to fix once broken. Storage needs can also pose an issue as apps grow.

Is decentralization good for development?

Answer: Yes, it allows developers complete freedom in selecting and assembling app components, which increases the potential for innovation. It’s also very easy to believe in a Web3, decentralized internet — giving developers a greater purpose for their efforts. On the other hand developing within the decentralization paradigm poses new sets of challenges and it requires more effort to achieve the same level of performance as Web2 applications.

Summing Up

By this point, we’ve proven that decentralization is a great boon for the future of development, the internet, and the world. Despite its pitfalls, the technology is still new, and the potential for innovation is unending.

What are your thoughts on the benefits of decentralization? Did we miss anything? Feel free to make suggestions or corrections in the comments.

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