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What do distributed and decentralized mean?


Distributed means that a certain set of data or capabilities are spread across multiple instances, often geographically or logically. Each different instance of what is being distributed is often called a “replica”. All these replicas connected together over the internet (or an intranet) form a distributed network.

When we say Distributed Ledger Technology (DLT), this means that there are multiple copies (replicas) of a ledger that are distributed across many different computers (nodes) that form the DLT network.


However, just because something is distributed doesn’t mean it’s decentralized. For example, a global bank could maintain 10 different nodes of their own internal DLT - with a node being present in each of their 10 major regions. While this network would be distributed (and thus benefit from the additional resilience that such a distributed system provides), it wouldn’t be decentralized, as one entity controls all nodes.

Decentralized therefore refers to the control of a particular thing being spread across many different parties. No one individual or organization individually controls it.

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