It is giving me great feeling of adding value to steemit platform when I started writing this homework task post for Steemit Crypto Academy Professor @yousafharoonkhan. The concept of Professor and Students in Crypto field is a great initiative by steemit management and I am very confident that it will become the best place to learn quality stuff about crypto ecosystem at steemit.

Steemit Crypto Academy Professor @yousafharoonkhan has explained in depth about the Decentralization and Centralization and I was able to understand the following thing from this lecture;

• Definitions and Concepts of Decentralization and Centralization
• Comparison between Decentralization and Centralization
• Advantages & Disadvantages of Decentralization and Centralization
• Which system can be better for business
• Procedure to know if any blockchain project is Centralized or Decentralized

I really appreciate the great effort put in by Our Professor for explaining this topic in details and I have learnt a lot from it.

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Home Work Task

At the end of the lecture, students were assigned a home work task by Professor @yousafharoonkhan that consist of five questions. I am writing my task below by writing answers for the asked questions.

Question No 1 :
Write the definition of Decentralization and Centralization in your own words. Explain these two systems in your own words.

Image Source

Decentralization

• It is the process in which authority, control or decision making process is not bound to any central of specific authority.
• Every person or entity is free to make their own decisions and perform actions and not dependent on any specific permission of approval by any person or authority.
• If we talk about blockchain, a decentralized one has records of public digital ledgers called blocks and it is used to record transactions across many computers so that any individual record of ledger cannot be changed by any central authority.
• A decentralized system empowers everyone involved in system and there is no hierarchy or chain of commands that one needs to follow. Everyone is independent to make their decision and perform different tasks in a decentralized system

Centralization

• It is a process in which authority, control and decision making policies are bound to a specific central authority or person
• Any person or entity involved in centralized system is not empowered with decision making and they have to follow the policies or system made by central authority
• There is proper hierarchy and chain of commands that must be followed and you are not allowed to do things at your own will.
• In centralization system, the identities of all the parties or entities are known.
• All the units in centralized are connected to a central unit and any blockchain following this system will be called centralized.

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Question No 2 :
Explain in your own words the difference between decentralization and centralization system Or Compare both in own words.

Comparison of Centralized and Decentralized System

Centralized System	Decentralized System
In centralized system, there is a specific central authority or entity who controls the system	In decentralized system, there is no central authority or entity who controls the system
In Centralized Crypto Exchanges, users funds are in control of the exchange	In Decentralized Crypto Exchanges, users funds are in his own control to use and run his business
You have to provide KYC verification in centralized system	You don't need to reveal you identity and can remain anonymous
3rd parties can be involved in centralized system like regulatory bodies	There is no 3rd parties involvement in decentralized system
Centralized system is more vulnerable to hacking and data theft	There is less chances of hacking and data theft in decentralized system
There is chance of single point failure in case any operator in centralized system do harm to system	There is no chance of single point failure because it is not operated or control by a single person
It is very easy to use interface on centralized exchanges	It is not easy to use interface on decentralized exchanges
Transaction fees are higher in centralized exchanges	Decentralized exchanges have lower transaction fees
Centralized systems have higher liquidity pool	Decentralized systems have lower liquidity pool
Centralized system data is stored on main server and can be manipulated by powerful people	Decentralized system data is stored in many servers that are interconnected so it is almost impossible to alter any data.
Centralized system scalability is low because data is stored on single server	Scalability is high in decentralized system because we have many servers availability

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Question No 3 :
Write five Advantages and five Disadvantages of decentralized and centralized system.

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Advantages of Decentralized System

1 - Control of Power
The most significant advantage of decentralized system is that users have full control over their transactions and assets. They don't need the permission of any authority to perform transaction and other functions.

2 - Security of Data
Data stored on decentralized servers are highly secured because they use cryptography and data from one block needs validation from adjacent blocks.

3 - No Modification of Data
As the data in decentralized blockchain is stored on many secure servers that are not in control of any single entity, so it is not possible to change or modify any data.

4 - Less Vulnerable to Hacking
Funds and data are stored on highly secure servers, so there are very less chances of hacking of data thefts. This gives you full confidence to do trading or business on larger scale as well.

5 - Lesser Transaction Fees
If we see from the business point of view, decentralized exchanges have lower transaction fees. Less fees are always a priority of traders as well as business owners, so this is one of the great advantage of decentralized systems.

Disadvantages of Decentralized System

1 - Chance of Crime
As the functions on decentralized system are done anonymously, so there is a greater chance of cyber crimes using decentralized blockchain networks.

2 - High Volatility
There is high volatility in decentralized cryptocurrencies that leads to bigger fluctuations in prices. These big fluctuations are not desirable for trading as well as business

3 - High Cost
The setup cost of a decentralized network is more because you have to install many data servers.

4 - Conflict of Interest
There can be conflicts in decentralized network if not organized properly because everyone has the freedom to do anything.

5 - Hard to Use
Decentralized systems or exchanges are not easy to use and it takes some time for users to understand how they work.

Advantages of Centralized System

1 - Easy to Use
The biggest advantage of centralized system is that it is easy to use. Most of the popular cryptocurrency exchanges are centralized and most of the people are using it without any difficulties

2 - High Liquidity
Centralized exchanges have the biggest liquidity pools and it is very easy to buy or sell any assets because there will always be enough liquidity to fulfill transactions.

3 - Chain of Commands
There is proper hierarchy and chain of commands in centralized system and every person has a specific role. This leads to better working in organized way.

4 - Lower Setup Costs
Centralized system has lower starting setup costs because you don't need to install many data servers.

5 - Quick Decision Implementation
As there are less people or data servers involved in centralized system, so it is easier and quicker to implement any decisions taken by top management.

Disadvantages of Centralized System

1 - Less Security
Centralized system is more vulnerable to hacking and data theft and this is one of the biggest disadvantages. We have seen many data breaches and funds stolen from different exchanges in past.

2 - Modification of Data
Data is stored on main server and any influential entity or person can modify or alter data that will be a question mark on integrity of any project

3 - Higher Transaction Fees
The transaction fees are comparatively higher in centralized exchanges and it is a headache for those business who are doing thousands of transactions daily.

4 - Single Point of Failure
Centralized systems are prune to single point failure which means that any operator in a network can do harm to system and the whole system will suffer for it.

5 - Limited Scalability
Most of the centralized systems are based on single main server and it is very hard to scale the business.

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Question No 4 :
Which one is better for Business/trading and why? (write in own words)

If we have to pick which of the system is better for business or trading, we have to look at the Pros and Cons of systems. As I have explained above that both centralized and decentralized system have advantages as well as disadvantage. So, we have to see the purpose behind the business or trading.

In my view, Centralized exchanges are better for retails traders because they can get started very quick and with small investment. It is easy to use and trade so many coins at these exchanges. Centralized system is also good for small businesses, where they are not storing sensitive data. The reason behind this is the low start up cost and easy to use feature. In any business consumer convenience is the prime factor that plays an important role in the success and this feature is provided by centralized systems.

On the other hand, Decentralized exchanges are better for Corporate traders and institutions where huge money is at stake and you need a secure database which is provided by decentralized exchanges. Businesses where it is required to store sensitive data of the customers, decentralized system should be adopted because of its security features. At the same time, there are less transaction fees in decentralized system which is very important in corporate sector due to high volume of daily transactions.

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Question No 5 :
How do you know if a blockchain is decentralized or not? You can describe any method, but in your own words.

Now, we understand the difference in centralized and decentralized system along with their their advantages and disadvantages. So it is very important to understand and know if a blockchain is centralized or decentralized. I will be checking Uniswap (UNI) blockchain to know if it is decentralized or not by going through following process.

Step 01

• Uniswap (UNI) runs on Ethereum network and we can get the contract address from coinmarketcap as shown in below picture.

Screenshot from CoinMarketCap and edited by me in Powerpoint

Step 02

• Open website https://etherscan.io/ by Clicking here
• Copy Uniswap (UNI) address and paste in Ethereum Blockchain Explorer search box and click search icon as show in below picture

Screenshot from Etherscan.io and edited by me in Powerpoint

Step 03

• Click on Contract Button as Shown in picture below
• Search out the contract source code for keywords "function destruct" or "self destruct"

Screenshot from Etherscan.io and edited by me in Powerpoint

Screenshot from Etherscan.io and edited by me in Powerpoint

Result
No function destruct or self destruct word appeared while searching the contract code that shows the UniSwap (UNI) is Decentralized Blockchain as instructed by our Crypto Professor @yousafharoonkhan.

Summary

This was a very useful lecture about the Decentralization and Centralization which is explained in detail by Crypto Professor that enabled us to learn about following things.

• Definition and Concepts of Decentralization and Centralization
• Difference between Decentralization and Centralization
• Advantages and Disadvantages Decentralization and Centralization
• Choosing Centralized or Decentralized System according to business nature
• Method to check if a blockchain in Centralized or Decentralized

I would like to pay my thanks to our Crypto Professor @yousafharoonkhan for this wonderful lecture and looking to learn more in coming weeks.

Regards
@cryptokraze