The concept of disintermediation can be explained with the aid of an example.
Imagine that you want to send money to a friend in another country.
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You go to a bank who, for a fee, will transfer your money to the bank in that country.
In this case, the bank maintains a central database that is updated, confirming that you have sent the money.
With blockchain technology, it is possible to send this money directly to your friend without the need for a bank.
All you need is the address of your friend on the blockchain.
This way, the intermediary; that is, the bank, is no longer required, and decentralization is achieved by disintermediation.
It is debatable, however, how practical decentralization through disintermediation is in the financial sector due to massive regulatory and compliance requirements.
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Nevertheless, this model can be used not only in finance but in many different industries as well.
Key Points to Remember
- Disintermediation The concept of disintermediation can be explained with the aid of an example.
- Imagine that you want to send money to a friend in another country.
- You go to a bank who, for a fee, will transfer your money to the bank in that country.
- In this case, the bank maintains a central database that is updated, confirming that you have sent the money.
Conclusion
Disintermediation represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.