Blockchain technology has revolutionized the way we think about data storage and transactions. At its core, blockchain is a distributed ledger that is decentralized and public. However, blockchain networks can have varying degrees of centralization. A centralized blockchain has a single node or organization that maintains control over the network. Transactions must be validated through this central node, which has authority over the blockchain. Many corporate blockchains like IBM's TradeLens are centralized.

1. Decentralized VS Centralized
Blockchains: Who Holds the Power?
Blockchain technology has revolutionized the way we think about data storage and
transactions. At its core, blockchain is a distributed ledger that is decentralized and
public. However, blockchain networks can have varying degrees of centralization.
A centralized blockchain has a single node or organization that maintains control over
the network. Transactions must be validated through this central node, which has
authority over the blockchain. Many corporate blockchains like IBM's TradeLens are
centralized.
In contrast, a decentralized blockchain allows anyone to join the network as a node.
Instead of a central authority, transactions are validated through a consensus
mechanism like proof-of-work. Bitcoin and Ethereum are examples of public,
decentralized blockchains where no single entity controls the network.

2. Decentralized blockchains aim to democratize power and distribute it amongst network
participants. However, decentralized networks can have disadvantages like slow
transaction speeds. As blockchain technology matures, hybrid models are emerging
that balance elements of decentralization and centralization.
How Centralized Blockchains Work
In a centralized blockchain, all network activity flows through a single entity that has
complete control. This central authority maintains the ledger, processes transactions,
and governs the entire system.
Centralized blockchains operate much like traditional banks or financial services
companies. There is a central server that stores user account balances and transaction
data. Users submit transaction requests to the central authority, which validates and
approves transactions before adding them to the ledger.
The central authority acts as the sole gatekeeper and decision-maker. It establishes the
rules for transactions, sets policies, and has full visibility into all network activity. Users
must trust that the central authority will maintain the integrity of the blockchain.
Centralized blockchains can process transactions more efficiently compared to
decentralized networks. However, they have a single point of failure - if the central
system is compromised, the entire network is at risk. There is also the element of
requiring trust in the central authority.
Overall, centralized blockchains sacrifice decentralization and distribute trust for faster
speeds and lower costs. They are well-suited for private blockchain networks where a
single entity needs to control the transactions.
How Decentralized Blockchains Work
Decentralized blockchains, like the CosVM Blockchain, operate without a central
authority by distributing data and control across a peer-to-peer network. Each

3. participant in the network acts as a node that stores a copy of the ledger and validates
transactions.
When a transaction is initiated, it is broadcast to the network, and all nodes, including
those in the CosVM Blockchain network, work to validate the transaction using
cryptography and a consensus mechanism such as proof-of-work. Once a majority of
nodes agree the transaction is valid, it is added to the ledger on all nodes
simultaneously.
This distributed consensus mechanism, allows the blockchain to operate in a trustless
manner, removing the need for a central authority. The network is resilient because even
if some nodes go offline or act maliciously, consensus ensures the valid ledger is
preserved across many nodes.
No single node or user controls the network. Decisions about updates to the blockchain
protocol are typically made through community discussions and consensus among
developers and users rather than dictated by a central party.
This decentralization provides greater transparency, security, and autonomy than
centralized models relying on a single point of control. While removing middlemen
reduces costs and corruption risks, decentralized systems, require more complex
coordination and can be slower due to the consensus process.
Differences Between Centralized and Decentralized
Blockchains
Control - Decentralized blockchains give control to all users, while centralized
blockchains concentrate control among a small group. In decentralized systems, users
have complete control over their data and transactions. Centralized systems require
users to accept the terms, conditions, and rules set by the central authority.
Point of Failure - Centralized blockchains have a single point of failure, as the data is
stored in one location. If that system is attacked or fails, it brings down the entire

4. network. Decentralized blockchains avoid this through data redundancy - each user
stores a copy of the ledger, so the data lives on even if some nodes fail.
Cost - Centralized blockchains can be cheaper to set up, as they require less
infrastructure and fewer decision-makers. Decentralized chains require each user to
provide hardware and nodes.
Trust - Decentralized chains allow trustless transactions between users who do not
know each other. Centralized chains require users to trust the central authority to
manage their data and transactions properly.
Development Rate - Decentralized chains have unlimited development potential since
all users can contribute. Centralized chains limit contributions to a single source.
Network and Data Resources - In decentralized chains, network resources are
crowdsourced from users. Centralized chains source all resources from the central
provider. Similarly, decentralized chains crowdsource data contributions, while
centralized chains rely on a single data provider.
Benefits of Decentralization
Decentralized blockchains provide several key benefits compared to centralized
systems:
Trustless Environment
Decentralized blockchains operate on a peer-to-peer consensus mechanism, meaning
users don't need to trust or rely on a central provider. The network continues to function
as long as nodes are operative and connected. This removes single points of failure and
allows users to dedicate time and resources to improving the system.

5. User Control
In decentralized networks, users collectively control the system rules and policies. This
contrasts with centralized systems where founders or corporations govern policies,
which often favor them over users. Decentralized systems empower users through
incentives and participation.
Growth Potential
Because decentralized blockchains support open ecosystems, users can contribute and
build on the network. This enables rapid growth, innovation, and evolution, similar to
open-source software development. The lack of centralized control removes
bottlenecks that can constrain development.
Challenges of Decentralization
Decentralized blockchains also come with some challenges and drawbacks compared
to centralized systems.
Government Regulation
One major challenge is government regulation. Because decentralized networks aim to
distribute power and decision-making, they can be at odds with government control and
oversight. Many governments are still exploring how to regulate and oversee
decentralized blockchain technology and cryptocurrencies built on it. There is often a
need for clearer regulations around decentralized networks.
Full Decentralization is Difficult
While decentralized networks aim to distribute power across all users, achieving full
decentralization is difficult. There is often still some centralization around the core
developers who build the protocol, mining pools or validators that secure the network,

6. and the founding team that launched the network. Fully eliminating centralized entities
can be an elusive goal.
Decentralized networks also often achieve consensus and make upgrades to the
network protocol through community votes of stakeholders. This can lead to
disagreements and conflicts between various stakeholders on the best path forward.
The governance and upgrade process itself often still has some centralization.
So while decentralized blockchains aim to distribute power, achieving entirely
decentralized cont.
Summary:
Blockchain technology offers both centralized and decentralized models, each with
unique governance structures. Centralized blockchains centralize control, akin to
traditional institutions, while decentralized blockchains like CosVM distribute control
among network participants.
Decentralized blockchains, such as CosVM, operate on peer-to-peer consensus,
enabling trustless transactions and user autonomy. Challenges include regulatory
uncertainty and achieving full decentralization.
Despite hurdles, decentralized blockchains offer benefits like trustlessness, user control,
and growth potential. CosVM exemplifies these advantages, driving innovation and
transparency in the blockchain space.