Centralized Vs Decentralized Digital Networks

The current business landscape is witnessing a surge in decentralised networks due to the emergence of advanced technologies such as Blockchain and cloud computing. These decentralised networks have evolved significantly from the centralised networks of the past decade. This blog aims to educate the fundamental distinctions between network environments and highlight their merits and demerits.

What is a Decentralised Network?

A decentralised network structure distributes among multiple devices instead of relying on a single server. This pattern has progressed from the swift developments in desktop and laptop computers that provide a performance level surpassing the requirements of most business applications. Consequently, the surplus computational capacity can be utilised for distributed processing.

How Does a Decentralised Network Work?

In a decentralised network, users own their data without any limitations. All data transfers are recorded on the ledger of every user in the network, making it impossible to alter the data once it is transferred through the blockchain. This feature has made it an ideal choice for developing cryptocurrencies and copyright processes. Despite its high level of security, a group of reliable tech experts must ensure its regular maintenance to keep the decentralised blockchain technology up and running.

What are Centralized networks?

A Centralised Network involves a single point connecting all nodes, thereby enabling communication control between each node. Due to centralised control, service providers can easily detect and track all data, making it highly efficient for businesses to manage user and customer data. However, this type of network also has certain drawbacks. If the central node fails, the entire network crashes, and can easily infiltrate the central network and alter transactions and data.

How Does a Centralised Network Work?

A centralised network revolves around a sole server or master node that manages critical data processing and stores both user information and data accessible by other users. Users can connect to the central server through client nodes and request data rather than execute them independently.

Difference Between Centralised and Decentralised Digital Networks

Advantages of Centralization:

Common Chain:

The command chain is well-specified and centralised. When an organisation uses centralization, they are aware of the chain of command. This means that everyone in the organisation understands their function and to whom they must report. They also know who is under their command and are accountable for their subordinate's behavior.

When it comes to a network that uses centralization, one central node or a group of nodes is in charge of transactional verification.

Reduce Costs:

One of the most significant benefits of centralization is the reduction in costs. Any centralised network or infrastructure demands less support and expenditure. Because centralised organisations or networks are planned, the costs associated with them do not exceed budgets unless it is absolutely necessary to expand the network.

Quick Decision Implementation:

Without a doubt, centralization organisations or networks allow for rapid decision implementation. Because centralised networks have fewer nodes or people, there is less communication between the various levels of authorization.

Advantages of Decentralization:

1. Full Access Control

One of the top benefits of decentralisation is that users have full control over their transactions. This means they can initiate a transaction whenever they want without requiring authorization from a centralised authority. To put it simply, the verification process is not reliant on third parties, and a decentralised network uses consensus mechanisms to validate the information.

2. Data Can’t be Renamed or Deleted

The data structure of blockchain technology is append-only. This means that no one can change or edit the data once it has been saved. Another blockchain system that uses other data structures, such as Corda, adheres to the immutability property.

3. Safe & Secure

Because of how they manage data and transactions, decentralised networks are secure. They use cryptography to ensure the security of the data ledgers. Furthermore, the data in the current block requires data from the adjacent block in order to validate the data using cryptography.

4. Censorship

Decentralisation entails less censorship. There is a greater possibility of information being restricted under a centralised system. However, because there is no central authority controlling the data, the decentralised network is less susceptible to censorship.

5. Open Development

Decentralised networks generally encourage open development. Because of the network's open development environment, incredible services, tools, and products are built on top of it.

Use-Cases of Centralized vs Decentralized

Payment Systems

How does a decentralised system used in the payment system? By using a decentralised, Your funds are always available because there is no central authority or point of failure.

It also eliminates the possibility of your funds being hacked or accessed by a bad person. So, by using cryptocurrencies to receive and transmit payments, you remove the function of the centralised entity from the process, thereby improving it in every aspect.

Another advantage of the payment mechanism is the elimination of intermediary expenses.

Voting System

The entire voting system scenario revolves around one critical issue: transparency. The existing method of voting does not take transparency into account. As a result, there are numerous conspiracy theories about how the votes are controlled within.

This is where a decentralised voting platform can help. It can be used by governments to administer elections and give transparent voting. In this manner, they can put to rest all of the speculations that emerge when general election results are announced.

Voters can readily verify their votes by utilizing a transparent voting system or a voting system that runs on a decentralised network. This also means that no party can commit fraud in the voting process. Another advantage of this method is that results can be announced as soon as voting is completed.

Conclusion: Centralized vs Decentralized: Which one is better?

Decentralised system network has only been used in a few applications, with only technology and banking operation. However, the decentralised system is still in its early stages and has already demonstrated enormous potential due to its high security, transparency and connectivity, and ability to foster fairness among its users.

Despite the fact that decentralised systems are not as frequently utilised as centralised systems nowadays, they are nevertheless employed primarily in the gaming sector, such as through NFTs in Play to Earn. With innovative plans like Walk to Earn, Step to Earn & Exercise to Earn, the fitness industry embraces decentralised solutions. We are convinced that the function of decentralised systems will expand and become a key part of many sectors in the future.