Crypto Academy Week 9 - Homework Post for @yousafharoonkhan Centralized vs Decentralized system
Greetings friends today I come to carry out the task sent by the teacher @yousafharoonkhan I hope you enjoy it
Home Work Week 1
Question # 1:
Write the definition of decentralization and centralization in your own words. Explain these two systems in your own words.
Decentralization: the decentralized system is one in which there is no government that controls everything, so each individual that makes up the network has an importance, has independence, has authority and decision-making, but not as an individual but as a whole, since In the decentralized system, the group is supported, the sum total of the parts is supported. The idea is that the system works independently between its parts, but in turn all seek the same objective that things work well, without any central authority that can hinder important decisions, since in decentralized systems important decisions are made between everyone.
Centralization: It is when there is a central authority that governs and controls everything, or at least all the processes must pass through its approval because this authority or superior authoritarian group has the power of decision-making and the other individuals that make up the network, only was the expectations of those decisions and can not in any way influence or participate in important decisions. In centralized systems, clients are connected to the central server and without it they will not be able to operate, they must also submit to the decisions of the higher power that controls the system.
Question no 2:
Explain in your own words the difference between decentralization and centralization system or compare both in your own words.
Both concepts are totally opposite, to begin with in a decentralized blockchain system you are the owner and have control of your cryptocurrencies, while in a centralized system the higher authority has control of your money, of course the central authority is supposed to be at your service, but in case of an attack on the central authority your funds would disappear.
Although centralized systems are easier to operate, it is understood that they have an owner since the higher authority has control, while, in decentralized systems, there is no owner, although the system is more difficult to operate and maintain.
Regarding the records in centralized systems, the higher authority has all the control and all the information, while in decentralized systems they all help to make the process more secure, each one puts a grain of sand so that everything operates as it should be.
Question no 3:
List five advantages and five disadvantages of the decentralized and centralized system.
Decentralized systems Advantages
- Since there is no higher authority, there is no one who can change the rules of the system suddenly, which gives you more peace of mind to plan your actions.
- There is more security in the data, because to attack the network you should attack all the nodes and it is impossible, if you attack a couple of nodes the others will be safe.
- As a common individual, you can be part of decision-making or at least your opinion should be asked since important decisions about the functioning of the body are everyone's problem.
- There is more confidence on the part of investors so it is a much more profitable system economically.
- Top management makes things easier so they can focus on solving problems quickly.
Decentralized systems Disadvantages
The implementation of the system is very expensive that is why there are even decentralized systems that remain in the project and do not even see the light of day.
Maintenance is very expensive, whatever the transactions, an example is the Ethereum network and its high commissions
Anyone can be part of the system, which allows groups to arrive that could threaten the proper functioning of the network and even criminal groups arrive
If you have a problem such as theft, there is no one who can help you, there is no one you can go to and help you
Prices are volatile due to many factors such as that anyone can become part of the mining process and only requires the investment of the hardware equipment.
Centralized system Advantages
- Maintenance and operation costs are lower
- The central authority solves problems quickly since it has control and power, if it is within its power, it will solve the problems.
- There should be no volatility because although the price of the token is determined by the market, the central authority will always advocate to keep prices stable or at least for the token to rise, as in the case of Binance and its BNB that usually burn tokens.
- There is no anonymity so criminal groups do not usually take refuge in these types of systems
- The central authority supervises and controls everything so if it is able to do its job well, everything will work very well.
Centralized system Disadvantages
- It is vulnerable to attacks and security breaches, many hackers are known to have successfully attacked central systems.
- The central authority can abuse its power and harm members who are against it.
- The system tends to work worse, slower, this is because all transactions must be approved by the central authority
- The most prominent members can be ignored by the central authority, since it will not choose the most suitable but those who are most convenient for it at the time of promotion or promotion.
- All the important decisions are of the central authority if this is mediocre it will be a real disaster.
Question no 4:
Which is better for business / commerce and why? (write in your own words)
I think that if I am going to be the owner or the central authority, if that is going to be my role, the central system seems fine to me because I trusted myself and my abilities if not and I am not going to be the central authority, then I prefer the decentralized system that will at least take me into account and I can be the owner of my own money if we talk about the blockchain world, because I think that the decentralized system in the blockchain world is the best there is, that is why the success of platforms like Uniswap. I believe that in general terms, decentralization offers better conditions for business, attracts more public and investors and gives everyone the opportunity to participate and does not depend on a leader or a central authority that, if mediocre, would lead the project or the organization to the debacle, I would only choose to do something centralized if I were part of the central authority, the rest I agree with the philosophy of decentralization I see the success and the future of most organizations in the future, although no matter how decentralized it is always You must have rules to follow. It is something that I think is important for success and that is compliance with the rules. So in general lines it will depend on your needs whether centralization or decentralization is better in both, success or failure can be achieved but I opt for decentralized blockchain systems, those are my favorites.
Question no 5:
How to know if a blockchain is decentralized or not? You can describe any method, but in your own words.
The first thing is to choose the network to analyze and this sela the unisawap network and its UNI token. I proceed to look for it in coinmarketcap https://coinmarketcap.com/es/currencies/uniswap/
Then I enter the contact number in https://etherscan.io/address/0x1f9840a85d5af5bf1d1762f925bdaddc4201f984#code
Now I'm going to click ** contract **.
Now I proceed to search for the ** destroy function **, encryption function destroy management only, self-destruct.
As you can see there is no destroy function so I can conclude that the system is decentralized.
We can conclude that both systems have their advantages and disadvantages, but in the blockchain world the decentralized system offers advantages that make the project more attractive to the public and investors in the long run, in terms of the financial world it will depend on your needs. And if centralization or decentralization suits you, it will also depend on the role that you are going to play in your organization.