nodes that all hold an equal share of control, and there is no defined central authority.</p>\n<p>Decentralized organizations function based on this model without a central authority that enforces regulations. <strong>Multiple decision-makers are granted equal authority</strong> to manage the system and work toward a common goal. Decentralized organizations are one of the two major types of organizational structures, along with centralized organizations.</p>\n<p>Companies that create franchises for expansion can be seen as decentralized in traditional business organizations. Individuals are able to buy the franchise, open new branches, and make independent decisions regarding the infrastructure and management of the company.</p>\n<p>Decentralized digital systems, like <strong>blockchain-based</strong> <strong>cryptocurrencies</strong>, run thanks to independent nodes that maintain the entire blockchain network.</p>\n<p>Cryptocurrencies like <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-bitcoin-btc/">Bitcoin (BTC)</strong></strong></a> and <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-ethereum-eth/">Ethereum (ETH)</strong></a> run on networks while the nodes run consensus algorithms, like <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-proof-of-work-pow/">Proof-of-Work (PoW)</strong></a> and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-proof-of-stake-pos/">Proof-of-Stake (PoS)</strong></a> to record all transaction data, verify it, and add new blocks to the blockchain.</p>\n<p><strong>Decentralized organizations may be more stable, democratic, and transparent</strong> than their centralized counterparts. 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href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-decentralized-governance/">decentralized governance</strong></a> into the fundraising campaigns of new crypto projects. The idea was proposed by <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/who-is-vitalik-buterin/">Vitalik Buterin</strong></a>, the creator of <a href=https://www.bitdegree.org/"https://www.bitdegree.org/crypto/buy-ethereum-eth/">Ethereum (ETH)</strong></a>, in 2018.</p>\n<p>The goal of DAICOs is to increase the investors&rsquo; trust in <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-initial-coin-offering-ico/">initial coin offerings (ICOs)</strong></strong></a>&nbsp;by allowing them to have more governance over the project funds.</p>\n<p>Initial coin offerings are campaigns used to raise funds for the development of new cryptocurrency assets. During an ICO, the development team dedicates a portion of the new asset to be sold to investors. ICOs set a <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-soft-cap/">soft cap</strong></strong></a> for the funding target. If the soft cap is not reached, the project is considered a&nbsp;failure. All funds are returned to the investors.</p>\n<p>If the ICO reaches its soft cap target, the developers <strong>receive the total funds along with any excess raised</strong> at the end of the funding period. The development team acts as the central authority over the financial decisions of the project. In some cases, this can lead to unfavorable outcomes.</p>\n<p>ICO projects sometimes do not meet their deadline and are considered <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-vaporware/">vaporware &ndash; projects that <strong>never reached full development</strong>. In some instances, ICOs can be instigated as malicious campaigns or scams as developers do not intend to actually launch the project.</p>\n<p>Investors have to provide funds to centralized ICO campaigns based on good faith. Thus, in the instances of scams or vaporware, they may <strong>lose trust in ICOs</strong> altogether and withhold their funds to ensure that they are not scammed out of their investments.</p>\n<p>The concept of DAICO introduces the concept of the decentralized autonomous organization (DAO) <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-smart-contract/">smart contracts</strong></a> in ICOs. In DAICOs, all proceedings are kept locked in the smart project while the investors&rsquo; group takes responsibility for the <strong>shared DAO governance</strong>.</p>\n<p>Once the ICO campaign is finished, all funds are not released at once. Instead, the investors vote on the tap variable, which determines the per-second rate at which the funds are released. If the developers <strong>fail to deliver a finished project</strong>, the investors can vote on granting themselves a refund from the remaining resources.</p>\n<p>It is expected that DAICO will bring more democracy into the ICO campaigns and grant investors more trust in new crypto projects. DAICO can also act as a protective measure for investors by <strong>reducing the number of scam campaigns</strong>.</p>","level":"medium","meta_title":"What is Decentralized Autonomous Initial Coin Offering (DAICO)? 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It depicts the financial activity of an asset that experiences a brief price recovery after a prolonged trend downwards. The bounceback is followed by a return to a downward trend.</p>\n<p>The name of the pattern originated from the saying &ldquo;<em>even a dead cat will bounce if dropped at a certain height</em>.&rdquo; The dead cat bounce market pattern is commonly used in both traditional and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-cryptocurrency/">cryptocurrency markets to observe asset behavior.</p>\n<p>Dead cat bounce trends occur when a significant number of <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-bear/">bearish traders close their short deals or if many <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-bull/">bullish investors think that the asset has reached the lowest possible decline and thus open <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-longing-long-position/">long positions</strong></a>.</p>\n<p>The dead cat bounce pattern is continuous since the price of the asset keeps moving in the predominant direction, i.e. downwards, even after the sudden recovery. The pattern can seem <strong>misleading</strong> since it appears as a reversal of the general trend. This can lead to bullish traders putting long positions on it, although the price proceeds with its downwards trend.</p>\n<p>During the peak of a dead cat bounce, traders may initiate short trades which allow them to make a profit when the bounce ends and the asset resumes the downward momentum.</p>\n<p>Predicting a dead cat bounce can be complicated, although there are technical and <a href=https://www.bitdegree.org/"/crypto/learn/crypto-terms/what-is-fundamental-analysis/">fundamental analysis</strong></a> tools to aid in the process. In general, dead cat bounce patterns can only be recorded after they have passed.</p>\n<p>Some variables can be used to determine the cause of a dead cat bounce. These include an increase in bearish traders closing their short positions or a growing number of bulls opening new long positions with the expectation that the asset has reached its lowest price. Momentum traders may also start placing positions if the market hints that the asset is oversold.</p>\n<p>Inexperienced traders tend to fall for dead cat bounces as they believe that the temporary uptick is a sign of a price recovery. Due to the lack of regulations in the crypto industry, dead cat bounce patterns can be heightened by illicit activities, such as price manipulation or tailgating.</p>\n<p>In order to determine whether an uptick in the asset&rsquo;s price is a bullish recovery or a dead cat bounce, analysts must continuously observe the market activity. While sometimes the price rising can point to a reversal of the market trend, if the downward trend continues, it may not reach the bounce levels for an extended period.</p>\n<p>Dead cat bounces do not reflect the true value of an asset. Instead, they show the dynamic way the market&rsquo;s collective psychology is following. Traders looking into opening new positions must always take precautionary measures into account.</p>","level":"medium","meta_title":"What is Dead Cat Bounce? Definition & Meaning | Crypto Wiki","meta_description":"Dead Cat Bounce meaning: Dead Cat Bounce - a temporary recovery of the asset price after a prolonged period of decrease.","meta_keywords":null,"language":"en","created_at":"2022-03-02T09:06:30.000000Z","updated_at":"2022-05-13T14:32:23.000000Z","preview_url":"https://www.bitdegree.org/crypto/learn/crypto-terms/what-is-dead-cat-bounce"},"currentChapter":"D","currentSection":"what-is-decentralization","chapterTitle":"D","readingLevel":"medium"},"url":"/crypto/learn/crypto-terms/what-is-decentralization","version":"cdd198d50cbe5c9c21c9329d7c096ffc"}" class="container-fluid d-flex crypto-book p-0">
Crypto Terms: Letter D

What is Decentralization?

Decentralization MEANING:
Decentralization - a system where the control is given to all network nodes instead of one central authority.
Medium
1 minute

Let's find out Decentralization meaning, definition in crypto, what is Decentralization, and all other detailed facts.

In the crypto sphere, decentralization is one of the core principles. It is a system comprising network nodes that all hold an equal share of control, and there is no defined central authority.

Decentralized organizations function based on this model without a central authority that enforces regulations. Multiple decision-makers are granted equal authority to manage the system and work toward a common goal. Decentralized organizations are one of the two major types of organizational structures, along with centralized organizations.

Companies that create franchises for expansion can be seen as decentralized in traditional business organizations. Individuals are able to buy the franchise, open new branches, and make independent decisions regarding the infrastructure and management of the company.

Decentralized digital systems, like blockchain-based cryptocurrencies, run thanks to independent nodes that maintain the entire blockchain network.

Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) run on networks while the nodes run consensus algorithms, like Proof-of-Work (PoW) and Proof-of-Stake (PoS) to record all transaction data, verify it, and add new blocks to the blockchain.

Decentralized organizations may be more stable, democratic, and transparent than their centralized counterparts. If the central authority malfunctions, it immediately negatively impacts the whole organization. However, if one or several nodes of a decentralized system experience failure, the rest of the network can still continue operations.

Decentralized systems may struggle due to a lack of a singular unified vision. Furthermore, the equal distribution of power may lead to responsibilities not being clearly defined. This can have negative effects on network efficiency.

An example of inefficiency can be the energy consumption required to keep blockchain networks running. In 2021, Bitcoin required more than 90 terawatt-hours of electricity, which is comparable to Pakistan's energy consumption, while processing speeds were at four to seven transactions per second.