Decentralized networks are made up of computers, also known as nodes, that interact on a direct, peer-to-peer basis without the need for third parties. Within a decentralized network, information is distributed to every single “node” on the network. Each node has an updated copy of the recorded data. Decentralized networks can also distribute data in such a way that information can be validated without that information being transferred to a third party by reaching an agreement among nodes. Data is validated by using an agreed-upon consensus mechanism, which often involves the other computers on the network checking the validity of the data before it becomes permanently imprinted onto a blockchain.
In a decentralized network, each participating node is independent of the others. Rather than following the instructions of a central authority, decentralized nodes connect using common rules, but maintain their sovereignty and manage their own privacy. This helps keep the network secure, while also ensuring relatively democratic governance.
A consensus mechanism is a way for nodes to come to an agreement about the integrity of data before it becomes part of a blockchain. Once the block contains this data, it is distributed amongst nodes, making it near impossible to change data that has already been recorded to the ledger. Instead of changing data in one centralized database, to change the data on a decentralized network (blockchain), a majority of nodes would have to be updated to reflect fraudulent information within a short amount of time. Otherwise, such information will be rejected by validating nodes.
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