Read any literature relating to bitcoin and cryptocurrencies and you’ll eventually stumble upon the concept of decentralization. To understand decentralization, you first need to understand the problem with centralization.

If we take a close look at the world we inhabit today, a world of information and data about who we are, what we do, and what we like, we realize that our information is held by a few large organizations: private and public corporations, and the government. The dataset representing you(financial records, emails, Facebook messages and likes, etc.) is held on servers that exist in a central location. For example, your financial records, crypto currency every transaction you’ve ever been a part of, your current balance and all your loans, exist on your bank’s servers. Your bank might have multiple servers for backup and audit purposes, but it still all exists in virtually one location: your bank.

So let’s say a cracker – a malicious hacker – attacks your bank’s servers and tampers with your account reducing your balance to $0. How can you prove that you didn’t just withdraw all your Making money off of bitcoin? How can your bank verify your claim that you were hacked?

The Cypherpunks, the community from which cryptocurrencies first arose, understood this bleak scenario and aimed to fix it. Cryptocurrencies are said to be decentralized systems because every user of a cryptocurrency keeps a copy of everyone’s transaction history. The moment you join a blockchain you receive the entire history of that cryptocurrency, all transactions ever made. If a user disagrees with a transaction (say a cracker changes their wallet value from 1 BTC to 1,000 BTC) a consensus must be reached by at least 51% of the users of that cryptocurrency. That 51% then decides what the correct amount should be.

This automatic consensus is the beauty behind cryptocurrencies and decentralization. There is no one server that crackers can attack. They would need to convince 51% of all users because every user keeps a copy of the blockchain.