A lot of us have heard about decentralization, blockchain and bitcoin, ethereum and many other cryptocurrencies (cryptos). Putting some of these ideas into context, many of us have a hard time explaining the different kind of decentralizations, such as Deconcentration, Delegation, Devolution, etc., and the reason why decentralization is a good idea and why decentralization makes sense in some areas and why it does not in other ones.
First of all, decentralization in general is not a new idea. We had human civilization for ten thousand years and over these years we had many examples of centralized things such as centralized governments, centralized companies, centralized cities. There is some evidence that even before we had computers and other information technologies (IT), we also had a various instances of decentralized economies, decentralized ways of interacting.
For example, democracy is a decentralized way of governing when power of authority does not belong to a king but to everyone. Another example is the invention of the printing press - it is hard to understand the impact of the printing press nowadays. We are so used to having a world's worth of information at our fingertips - it is hard to understand the little amount of information people in medieval Europe had access to. Printing press allowed ordinary people to cheaply record and communicate an ideas freely without any censorship.
Watch the video to find out more about the decentralized world.
Blockchain is the technology that allows digital information to be distributed, but not copied. That means each individual piece of data can only have one owner.
You may have heard it is described as a “digital ledger” stored in a distributed network. Here is a good example, anology that helps to understand how blockchain works:
The information is constantly reconciled into the database, which is stored in multiple locations and updated instantly. That means the records are public and verifiable. Since there is no central location, it is harder to hack it since the information simultaneously exists in millions of places. (Doughi, 2018)
“Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.”
In this section you will learn more about basic concepts of risk management, such as utility, business continuity and risk matrix.
It leads into the second section - dedicated to the basics of blockchain and then, thirdly, into how known these two worlds merge.
Check out this case study - including references for using blockchain to mitigate the risk for fund allocation by using blockchain concepts