Lesson 1 - Introduction to blockchain - Continue...

Blockchain is the aspect of decentralization; it is an interconnected information system without a single entity acting as a central authority, such as a financial system without a central bank to verify transactions or a supply chain system in which the network shares supply and coordination activities without the need for a central authority, which raises the question of why it is important and why we need decentralized systems. Indeed, a central authority creates a single point of failure if that entity encounters issues or misuses information, making the entire system vulnerable (to external factors such as attacks or misuse). Furthermore, centralized systems are easy targets for hackers. Every attacker understands that centralized systems always have at least one weakness. Hackers can exploit that weakness to gain access to the entire system or its most valuable components; for example, hacking the central server of a bank can disrupt service for all customers. Decentralization distributes decision-making power among entities rather than a single authority; consensus algorithms are the way to achieve those decisions. Both decentralization and consensus algorithms reduce the risk of system compromise while opening up a whole new range of use cases and possibilities.

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