What is Decentralization?

Lately, the term decentralization is increasingly being used in various aspects of life, including in the crypto world. Decentralization has different meanings, depending on the focus of the industry being discussed.

For example, in organizations, decentralization is a specific form of organizational structure in which the highest management delegates decision-making responsibilities to those below it. In the business world, decentralization is needed to build a more efficient system.

In organizations, decentralization is done by delegating responsibility and decision making to several people and not focusing on one person. Basically, one of the main advantages of decentralization is to make the system more efficient. Apart from that, some other advantages of decentralization are as follows.

*Can help the organization grow as a whole.

*Promote accountability and transparency.

*Develop more leaders.

*Delivering innovation and flexibility.

*More efficient communication.

*Quick decision making.

*Ease of expansion

*Better supervision and control.

Disadvantages of Decentralization

Even though it seems to bring many positive impacts, as reported by Pintu Academy, there are several shortcomings of a decentralized system in an organization, namely:

-Difficulty coordinating the organization as a whole.

-Not ideal for a start-up organization.

-Creates the potential for unfair competition.

-The possibility of overlapping decision-making and responsibilities.

Some examples of decentralization in daily life aspects are as follows.

1.Political Decentralization.

Political decentralization requires reform of the constitution or laws, the development of political parties, the formation of local political units, to the encouragement of effective public interest groups.

One concrete example of political decentralization is the handover of some tasks from the top institutions to lower institutions, for example local governments assisting the central government's tasks to make work more efficient with a wider scope.

2.Fiscal Decentralization.

Fiscal decentralization is one of the functions of decentralization in the financial sector. If both the government and private companies are to carry out the decentralized function effectively, they need to have sufficient authority to make decisions on the expenditure of the entity concerned.

One example of fiscal decentralization is the division of authority for tax collection and public service spending from the central government to local governments.

3.Decentralization in the Blockchain and Crypto World.

The last example of decentralization is in the world of blockchain and crypto. Some of the advantages of cryptocurrencies that work on blockchain are that they allow transactions without intermediaries, are relatively safe, and transactions are cheaper and faster.