Decentralization Vs Centralization

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.

• 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.

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

• 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.

• 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.

• 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.

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

• 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

• The setup cost of a decentralized network is more because you have to install many data servers.

• There can be conflicts in decentralized network if not organized properly because everyone has the freedom to do anything.

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

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.

• 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

• 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.

• 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.

• Centralized system has lower starting setup costs because you don't need to install many data servers.

• 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.

• 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.

• 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

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

• 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.

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