A decentralized network in cryptocurrency refers to a system where the control and decision-making processes are distributed among multiple participants rather than being overseen by a single entity. In a decentralized network, each participant, or node, has equal authority in making decisions and validating transactions.
Decentralization helps to eliminate the need for a central authority, such as a bank or government, to facilitate transactions. This enhances transparency and security as there is no single point of failure in the network. Additionally, decentralization makes it difficult for any single entity to manipulate or control the network.
In a decentralized network, consensus is achieved through mechanisms like Proof of Work or Proof of Stake, where participants collectively agree on the validity of transactions. This distributed decision-making process ensures the integrity of the network and prevents fraudulent activities.
Overall, decentralization is a key characteristic of many cryptocurrencies, such as Bitcoin and Ethereum, as it promotes trust, security, and autonomy among network participants.
