Decentralized
Blockchain FAQ

Decentralization is the core concept of blockchain technology.
It allows for stable and secure operations such as fund
transactions. However, it will be helpful to understand some of the nuances behind the terminolog.
What is a decentralized blockchain?

One of the definitions of blockchain that you might have come across is “distributed, decentralized public ledger” meaning that decentralization and blockchain go hand in hand. Let’s take a closer look at decentralization as the underlying concept of this technology.

Vitalik Buterin, the founder of the Ethereum blockchain, suggests there are three dimensions of decentralization:

  1. Political decentralization
  2. Architectural decentralization
  3. Logical centralization
Political decentralization
Compare fiat money (GBP, USD, EUR, etc.) and Bitcoin.

UK pound

Politically centralized

Regulated by a financial authority such as the government or its central bank

 

Unlike most blockchains, L3COS is politically centralized. The operating system is designed to be regulated by the government.

Bitcoin

Politically centralized

Regulated by no organization or person

Architectural decentralization If any node goes down, the blockchain remains operational as there is no central point of failure
Architectural decentralization

Bitcoin, Ethereum and other blockchains are architecturally decentralized. They rely on an infrastructure that doesn’t depend on a common (central) point of control.

The blockchain infrastructure is a distributed network of computers, otherwise known as nodes. If any of them goes down, the blockchain will keep running. This is what makes this technology so reliable.

Similar to other blockchains, L3COS is architecturally decentralized. It operates on a distributed network of nodes which makes it highly resilient to attacks and shutdowns.

Logical decentralization The consensus mechanism provides the central logic of a blockchain
Logical centralization

At the same time, there is a central logic that binds components of any blockchain, making it logically centralized.

This binding point is a commonly agreed state of data. Nodes in a blockchain use the consensus mechanism to ‘agree’ on this state of data. As a result, the blockchain functions as a single computer with a common database available to each node and user.

As a blockchain, L3COS is logically centralized. It functions as an integral digital organism drawing on three levels of consensus.

Are all blockchains
decentralized?

We know about the three types of (de)centralization in blockchain technology, but is a centralized blockchain possible?
Are there logically decentralized blockchains?
The short answer is ‘no’. Every blockchain is built around a particular logic that allows it to function as a unit. It is a chain of blocks, not a ‘blockbunch’ or ‘blockset’.
However, some believe there can be a logically decentralized blockchain.
Are all blockchains architecturally decentralized?
Yes. A blockchain cannot be centralized from the architectural point of view.
Or, at least, it does not make sense to try and create an architecturally centralized blockchain. A construction like that would simply be deprived of the advantages of blockchain such as its resilience and data immutability.
Are all blockchains politically decentralized?
No. You can create a blockchain to be regulated by the main authority that has complete or more rights over the other users. This type of blockchain is politically centralized.
In other words, what some might currently describe as a centralized blockchain can also be a regulated (politically) decentralized (architecturally) blockchain.
L3COS is decentralized architectually, but designed to be regulated by the democratically elected government of a country.

What are the advantages of
decentralization in blockchain?

The advantages of decentralization are what makes blockchain such an admired technology. These include:
Transparency
Transparency
High level of transparency achieved through the distributed network of users
Stability
Stability
High level of stability achieved by the distributed network of components the blockchain operates on
P2P-connection
P2P-connection
No intermediaries required to do transactions between parties
Resistance to attack
Resistance to attack
Resistance against cyberattacks because there is no single component that, when attacked, could do real damage, which makes such attacks too expensive and not worth undertaking
Resistance to collusion
Resistance to collusion
No opportunity for collusion as due to its immutability it is extremely transparent and traceable
L3COS, has all the benefits of a decentralized blockchain:
it is secure, stable, transparent and immune to attack. It also takes technical
decentralization to a new level, as the illicit use of these benefits can be enforced by the regulator.

What is the difference between decentralized and permissioned blockchain?

Although a common misconception, the question itself is wrong as every blockchain is essentially decentralized. Decentralization and the permission-based nature of blockchain are different-level concepts, so they can’t be compared. In other words, a blockchain can be both decentralized (architecturally speaking) and permissioned (politically speaking).

The better question would be what is the difference between a permissioned blockchain and a public blockchain.

Public blockchains are often described as community owned. Users of these blockchains can make transactions and use the blockchain’s functionality without anyone’s permission.

For an example, you don’t need to look any further than Bitcoin and Ethereum. The former is the most basic, first-generation blockchain that enables the eponymous cryptocurrency. Ethereum is more advanced, as it has enabled smart contracts and decentralized apps (DApps).

Permissioned blockchains, by contrast, operate on a system of permissions. This means that they can’t be used by someone who isn’t registered or permissioned. Using this permissioned blockchain technology is a sound decision for major businesses and organizations as it does not allow for any unauthorized use.

The most prominent examples of permissioned blockchains are L3COS, Hyperledger, Quorum and R3.

What is the difference between distributed and permissioned blockchain?

‘Decentralized’ and ‘distributed’ have very similar meanings in the context of blockchain. Why is that?

‘Distributed’ is essentially another word for ‘architecturally decentralized’.
It means that a blockchain, from the decentralization-focused point of view, can be:

a) unregulated (politically decentralized), distributed (architecturally decentralized), and logically centralized

b) regulated (politically centralized), distributed and logically centralized.

As its heart, every blockchain has a distributed architecture that is unified by central logic.

L3COS is regulated and distributed. It doesn’t need to be described as logically centralized, because all blockchains are.

So what about L3COS?

The L3COS blockchain is decentralized in the architectural sense. In other words, L3COS is an operating system that runs on a distributed blockchain.

Logically, it is also centralized since the system’s logic is based on three levels of consensus that work as one.

What makes the L3COS blockchain different from other blockchains is that it is centralized in the political sense. It is designed for governments to regulate it, and enable the power of technology to be used by governments, businesses and every individual.

L3COS provides all the benefits of decentralization. These include high security, stability, direct transactions between participants, and resistance to attack and collusion.

As a government-regulated system, L3COS is permissioned. The permission system is based on three user levels:

  1. Government bodies and members
  2. Businesses and their representatives
  3. Society and individuals

Each level has permissions and can be regulated down to a personalized basis.
For example, a society can come to a consensus on ways in which the country should be regulated, giving respective permissions to the government.
The government, in turn, will ensure that every participant of the system, whether a member of government, a business, or an individual, complies with those regulations.

 

See also:

What is consensus in Blockchain?
What is a regulated Blockchain?
Permissioned and permission-less blockchain: what is the difference?


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