Steemit Crypto Academy Season 2 Week 1 Task | Decentralized and Centralized system , Advantages & Disadvantages and which one is best for business? | lecture by @yousafharoonkhan
Introduction
It’s an honour to learn again at the crypto academy
this week and I’ve learned from professor @yousafharoonkhan where the professor discussed about decentralization and centralization. In this article, I will speak at length on Decentralization and Centralization.
Definition of Decentralization and Centralization
.png)
Decentralization System
Decentralization system in the crypto space is the type of system
whereby individual users have access to their account private keys/Mnemonic keys and as such, it gives users the right to alter their account at will. In this type of system, all components or nodes of the system have the capability to work individually without receiving orders from another top component or server. Decentralized system is the system employed in cryptocurrency wallet as users have the keys to their accounts. I will proceed to centralized system now.
Centralization System
Centralized system in the crypto space is the type whereby all
components in the system can’t work independently in all cases but rather take orders from a central server as such, users don’t have access to their account keys. This is the method
employed by the exchanges which has a central governing system that send out orders to other nodes of the system and users can only create password and 2FA verification to secure their accounts.
Comparing Decentralization and Centralization
The definitions of each systems I’ve given above shows some basic
differences between the two systems and in this section, I will give a more detailed comparison
between both of the system. The comparison will be shown in the list below.
- Decentralized system gives users full control over their assets while Centralized system limits
users control over their accounts and assets. - Decentralized system allow users to have the keys to their accounts such that they can easily
make changes at ease while Centralized system only allow users to create password for their
accounts, which means there is a limit to what they can do on their accounts. - Decentralization system components work on their own without taking orders from others or
superior component while Centralized system components or nodes have their orders given from a superior and central component or node. - Hacking is another comparison to make Decentralized system is always protected if the user safely keep his/her keys while Centralized system is more opened to hacking activities as there has been cases of hacks on centralized systems before.
Advantages of Decentralized System
- Owners have full control over their assets at any point in time.
- The ability of each node to work independently is a great advantage.
- Safety is improved compared to centralized system as long as the user protects the account keys.
- Decentralized system eliminates the presence of intermediaries in transactions, which means
users can interact with the decentralized system for transactions, independently. - The system allows users to widely explore as it is characterized with high scalability (handling
many transactions at a time).
Disadvantages of Decentralized System
- Decentralized system cost of operation is high compared to the centralized system.
- The security of a user’s asset is solely depending on the user such that if there are cases of hack, the user bears it all unlike centralized that can still do a little to return some assets to users if the hack is general.
- Quoting of price on decentralized system is often not too accurate as compared to the accuracy on centralized system like exchanges.
- Users have to abide with the set down rules as there is no room to make a quick change to the
system. - Market uncertainties like price fluctuation hinders full utilization of decentralized system.
Advantages of Centralized system
- Centralized system has a board of experts that makes great decision that will benefit all users on the network.
- Efficiency of transactions is improved through centralization as there are regulations on the
system. - There is a clear appointment of qualified personnel at different arm of centralization to enhance better decisions.
- The cost of operation of centralization is quite lower compared to decentralized system.
- Proper verification of individual users is done in centralization and this can reduce the tendency of some individual hiding under another name to carry out frivolously activities.
Disadvantages of Centralized system
- Involvement of intermediaries in transactions.
- Users don’t have full control over their assets.
- The keys to the account are not given to users and as such, users are limited to what can be done on the system.
- A central server that sends out orders to other components or nodes which hinders the individual full exploration of accounts by users.
- Accounts are more susceptible to hacking.
Which is better for Business?
After considering several factors about these two systems, with each having benefits and demerits associated with it, in this case, I will choose Decentralized system with a number of factors which will be listed below.
Elimination of intermediaries in transactions: With this, I believe individual customers would be able to interact with the decentralized system without having to go with third parties that might slow down transactions. Fast transactions are enhanced with this system.
High Scalability: This is a good factor to consider as large volume of transactions can be carried out in this type of system as compared to the centralized system and this would enhance the timeliness of transactions in one’s business.
Self-custodian: Users on the network can make preferred decisions as at the time they want and this would enhance customer satisfaction and further strengthen the business.
How to know if a Blockchain is Decentralized or Not
In this section, I will be talking on how to know if a particular blockchain is decentralized as claimed or not. And this is a easy step to take as taught by the professor. I will be using REEF Finance for this study. The steps are listed below;
Step One
Step Two
- Locate the search field.
- And paste the REEF Finance contract address.
- Click the search icon.
- REEF Finance contract address: 0xfe3e6a25e6b192a42a44ecddcd13796471735acf
Step Three
- You have the contract details displayed.
- Click on contract.
Step Four
- Search the code for function destruct.
The function destruct was not seen which means REEF Finance is a decentralized protocol.
In conclusion, it is important to draw comparison between decentralization and centralization and noting each importance to making a good decision as at when needed. This is a great lecture from crypto professor @yousafharoonkhan and thanks to you professor. Thanks to all for reading.
Special regards;
Cc: @steemcurator01
Cc: @steemcurator02
Cc: @steemitblog
Cc: @yousafharoonkhan
Written by; @fredquantum
First respected student Thank you very much for taking participate in Steemit Crypto Academy Season 2, Week 1 course class..
yes it is the beauty of the decentralization system that gives power to its user,
thank you very much for taking participate in this class, you tried to explained the assignment well ,
last please do not mention @ steemcurator01 @ steemcurator02 @ steemitblog
Ratting : 6
Okay, sir. Thanks for reading through my piece of work.