Decentralization is the process of distributing and dispersing power away from a central authority.

In the world of cryptocurrencies , decentralization plays a critical role in many aspects like safety , security and their very philosophy which has lead to their design and future expansion. This is why decentralization is usually mentioned as something really important especially after the launch of the legendary Bitcoin. However the cryptocurrency projects which are really decentralized in every level , are very few.

 

There are three major tiers of Decentralization for the Cryptocurrency Projects:

1) The tier of the Network:   This is the way that the whole network is built , based on the transaction model that is being used. For example a Proof of Work network is trying to have its hashing power decentralized in order to provide a peer to peer transaction system, without the need of a third party approving everything. 

2)  The tier of the coin distribution: This is the way that the coins/tokens of the Project are distributed. A higher concentration of the coins in specific addresses leads to Centralization of funds. This increases the risks of potential attacks and it usually comes from unfair tactics like projects with huge premine or third parties that target to function as bank with blockchain technology, after realizing that the pure PoW coins are here to stay.   

3) The tier of the decision making : Very few projects achieve both the above plus the decentralization in their ecosystem expansion and decision making. This can be seen only in really Community oriented Projects because there is no company behind them but a whole Community caring for the Project and doing their best for its organic expansion.

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