The concept of centralization refers to a system where decision-making and power are concentrated in a single authority. In such systems, a central body governs, enforces rules, and directs actions, while lower levels follow those decisions.

Advantages of centralization include clear responsibilities, faster decision-making, and stronger control over long-term strategies. However, it also has drawbacks, such as the risk of corruption, exclusion of local expertise, and miscommunication between the center and participants.

The opposite of centralization is decentralization, where decisions are distributed across the network without a single authority. Before Bitcoin, building decentralized consensus was thought to be impractical. With its creation, however, decentralized systems became a viable alternative, reshaping the debate between centralized vs. decentralized governance.