DECENTRALIZATION VS CENTRALIZATION

DECENTRALIZATION is the process by which power or control is being distributed or delegated away from a central, authoritative location or group to the lower class in order for them to manage their affairs and promote their own development independently. Decentralization can be political, administrative, fiscal, or economic.

CENTRALIZATION is the process in which power or control is being concentrated to a specific authority or location. This means that every one under such an organization answers to one authoritative figure.

SIMILARITIES BETWEEN DECENTRALIZATION AND CENTRALIZATION

Though they are vastly different, there are few similarities between them.

1. Both decentralization and centralization promote the growth and development of an organization.
2. Both of them are not limited to politics.
3. In both decentralization and centralization, the government retains a certain degree of control no matter how minimal it may be.

DIFFERENCES BETWEEN DECENTRALIZATION AND CENTRALIZATION

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1. Though, a centralized government is capable of taking and implementing decisions more quickly, the decisions may not be suited to needs of the people and the minority will be left out in the decision making. In a decentralized government, decision makers are closer to the people and are, therefore, able to identify the needs of the people thereby promoting more useful and effective laws and bills.
2. The centralization of power leads to the reduction of public participation, and the centralized government is blamed for failures. Although, decentralization promotes public participation and the public will have no excuses but to own up to whatever failures that are encountered as there will be no one to blame.
3. With decentralization, people are given the ability to become independent and develop themselves in their own way and at their own pace, but with centralization people do not have such independence as they must answer to an authority. The changes and developments are based on the orders and directives of that authority.
4. In a decentralized system, the burden is being Shared among the people, but in a centralized system, an authority is required to bear the burden.
5. A decentralized system is prone to instability due to multiple conflicting decisions as everyone is given a voice and the ability to make decisions, but a centralized system is relatively more stable as fewer people have the ability to make decisions.

ADVANTAGES AND DISADVANTAGES OF DECENTRALIZATION


You might be wondering “decentralization is obviously the champion here, why would you say it has disadvantages?” Well, the truth is I don’t know if decentralization is the champion, whatever works for you. One thing i know is that everything has a disadvantage as well as an advantage.

ADVANTAGES OF DECENTRALIZATION

1. Decentralization reduces the burden of and authoritative figure.
2. It satisfies human needs for control and power.
3. It promotes independence.
4. It causes people to become responsible.
5. Decentralization brings about greater growth and development

DISADVANTAGES OF DECENTRALIZATION

1. If not properly managed. decentralization could cause conflict. When multiple people have been given control instead of few authoritative figures, there is no one to answer to and this could lead to a major conflict of ideas and development thereby promoting a stray from the initial goals and objectives.
2. Decentralization makes It difficult to coordinate the activities of the people. This makes it impossible to fully monitor the development and growth as a whole.

ADVANTAGES AND DISADVANTAGES OF CENTRALIZATION

1. A centralized system is a system with a clear chain of command. Every person under this system knows who to listen and report to.

2. In a centralized system, the visions, goals and objectives are being made as the main focus and are followed with ease. The people within this system are guided towards achieving them.

3. The development and growth are better supervised in a centralized system as the leader retains control of the growth and development.

4. With fewer people in control of the decision making, there are fewer conflicts. The plans and objectives are quickly executed in the right orders they ought to be.

DISADVANTAGES OF CENTRALIZATION

1. The growth and development is limited to the expectation of the leader. The minority are unable to contribute to the decision-making process, this hinders the motivation of the people.
2. The decision makers do not know the problems of the people implementing their decisions and they are not easily accessible to the minorities. This results in a decline in the performance of the people tasked with the implementation of the decisions.
3. In a centralized system, the leader will lose the loyalty of the minority. This is because no one will stay loyal to a system that does not value or create allowances for the people to take initiatives in the work they do. People tend to be loyal when they are given leave to introduce their creativity and are welcome to suggest ways of performing certain tasks.

WHY A DECENTRALIZED SYSTEM IS CONSIDERED MORE SUITABLE FOR BUSINESS AND TRADING

Knowing the difference between a centralized system and a decentralized system, without a doubt each of them has its strengths and weaknesses. In some cases, a centralized system is very much appreciated and in other cases, decentralization is Needed.
As relating to business and trading, one cannot argue the fact that decentralization is much appreciated. This is because in a decentralized system, everyone is in a competition to create more growth and development. This results to a higher rate of productivity and success. Though, it is not all rosy with a decentralized system as it obviously seems, if the decentralized system is controlled there will be a considerably lesser disadvantage unlike that of a mismanaged system.

As regards to trading, cryptocurrencies and blockchains for example are mostly decentralized and this is undoubtedly a system that works exceptionally well. People own their own private keys, they become their own banks and they have every say in their transactions with no limitations on the amount and quantity of cryptocurrencies an individual can own.Also. It is a highly secure system. As a result of this, people are learning how to trade each day because they understand that they have a greater level of independence when it comes to this business. This makes me wonder what the effects of a centralized system on trading will be. What do you think?

HOW TO KNOW IF A BLOCKCHAIN IS DECENTRALIZED

“What is a blockchain?” A blockchain is a decentralized, distributed and public digital ledger of transactions. A blockchain consists of blocks, each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.
Simply put, a blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A typical example of a block chain is a document or textbook that has been created and shared to a group of people. This creates a decentralized distribution chain that gives everyone access to the document at the same time and no one is locked out or waiting for their turns to view this document. The best part about this document is that it cannot be hacked or changed illegally. Think about it, you can modify yours but it will not affect others and therefore the changes will be visibly noted.
Though, the initial idea for a blockchain is that it is made to be decentralized but as you know, all good things must come to an end, or in this case, they must be challenged. Blockchains can now be centralized. There are still majorly decentralized blockchain as well as a few centralized ones.

There are various ways to identify a centralized blockchain, it is important to always spot the difference.

1. Unlike a decentralized blockchain, a centralized blockchain has little or no privacy as there is a third party Involved with the transactions.
2. There are no anonymity unlike the decentralized blockchain that can boast of such.
3. The transaction fees are higher In a centralized blockchain than that of a decentralized blockchain.
4. Unlike that of a decentralized block chain, a centralized blockchain is riskier as it is easily hackable and therefore cannot be considered safe or secure.
5. In a centralized blockchain, a central authority holds all the control, but in a decentralized blockchain, each person is given total and absolute control over everything.

@yousafharoonkhan