Centralized

From CryptoCurrency Wiki

Basics

  • The opposite of decentralized.
  • Centralization is one of the key tenants blockchain technology tries to get rid of and overcome by, but not exclusively, consensus mechanisms like Nakamoto consensus.
  • When something is centralized it means it is owned by and benefited off of by one or a small amount of parties. Centralization is a structure in which the involvement of is guaranteed by subjection to another party which explicitly owns the said object of interest. Think traditional money (politically owned), data (owned by big tech companies), and so on.
  • Within cryptocurrencies, centralization often is talked about within the context of how many mining pools or staking pools there exist within a layer one blockchain, or what the admin keys are allowed to do within a DeFi DApp.