Thank you the steemit team for starting up this learning class again. It has been quite impactful since the advent of this academy. I have also learnt more from @yousafharoonkhan lectures on the decentralization and centralization systems especially on how to know if a system is decentralize or not.
Question1: Definition of Decentralization and Centralization Systems
Decentralization System in my own understanding simply deals on how power, authority, decision making of a body are distributed among all component units that makes up the blockchain.This also entails how I freely have to use and manage my account in a blockchain community without having to take orders or permission from a superior authority in same community. Every account user in the the blockchain operates individually without taking orders and detecting how they operate. Since i joined the steemit Blockchain which happens to be a decentralized platform, I have seen the level of transparency to be top notch, all activities/transaction done in the blockchain were well documented and open to the public. From the comfort of my account, I can view all my mentions, comments, token transfers done, resteem posts, upvotes and downvotes etc, and even on other users account.
Centralization System in the crypto community is a vertical opposite of what we have in the decentralization system where all decision making unit, authority and chain of command are been centralized. Account users do not have a sole authority of working as an individual entity. There is a controlling unit that powers every other individual entities, hence working with guidelines directed by the central unit. For a example, the case of Former US president who was blocked from his Twitter and Facebook accounts during the heat of US electioneering. This is a case of a central server and governing body, limiting the operational individual entities of those who subscribes to their system.
Question2: Difference/Comparison Between Decentralization and Centralization Systems
- Decentralization systems do not have to wait for orders to be given from a central controlling unit before transactions and orders are made by account users but in the Centralization systems, account users have to wait for a central server or superior user to give a go ahead or access on any task before it is executed.
- Decentralization Systems just like what I have experienced in the steemit blockchain, gives me all my keys which enables me to have totality of my account at will whereas the Centralized System only gives a first line access to me as the account user by granting me access to just password which invariably limits my full access to my account operational access.
- Decentralized systems guarantees access to open source information to the public hence ensuring top notch transparency to every interested person who cares whereas the Centralization System is a limited and close kind of platform which only gives to the public those information which puts it in a good light. This promotes fraud and financial recklessness due to the non openness of information at public domain.
- In Decentralization System, issues of hacking and system compromise are rare and impossible since there are multiple nodes and blocks that needed to be hacked before gaining access except for cases of user key misplacement or carelessness whereas in the Centralization System, there are multiple cases of hacks every now and then because of its central service system.
Question3:5 Advantages and Disadvantages of Decentralization and Centralization System
Advantages of Decentralized System
- Ability to work independently as a node in the blockchain void of any central unit command makes it a great platform.
- Guarantees transparency with its open source information, hence reduces unwarranted losses that might occur due to shady information records.
- Removes issues of bottleneck and third party interference which inhibits ease of doing transaction.
- Aside removing issues of third party who delays or increases bureaucracy processes, it also reduces over head cost. Assets/Fiats allocated in servicing the use of third party agents are saved.
- It offers high safety protocols which removes issues of hackers and loss of assets. Due to the high level blockchain protocols used where data are processed, completed and saved in blocks, it is difficult to edit or alter information saved in them.
Disadvantages of Decentralized System
- The cost of operation in putting up this system is on the high side. This would invariably be applicable to large size markets who have the capacity to foot the high cost.
- There are cases of high market volatility which haves the price and value of assets hence reduces the full potentials of the owner to access its assets.
- It runs a rigid kind of system that slowly responds to changes. So users in blockchain have to manage and adapt on current workings of the system.
- Issues of loss of assets are solely on the individual to bare. Due to the blockchain protocols configured in a way that the individual have sole control of the account, it is usually too much for individuals who loose their assets.
- There is no quick response geared to stop fraud or perceived crime in the system. For example, a recent account hack on a steemit user where the hacker was powering down SP, ordinarily this process would have been suspended or stopped in a centralized system, but not applicable in the decentralized system.
Advantages of a Centralized System
- This offers a vibrant mechanism to drive efficiency in delivering tasks and transactions in the system.
- It improves on its Know Your Customer (KYC) principle to narrow down all activities done by its customers to prevent unknown/untraceable frauds and scams within her system.
- There is a clear cut share of responsibility all geared towards better service delivery which is beneficial to all its users.
- The cost of running a centralized kind of system is quit lower compared to that of the decentralized system.
- It has a more user friendly platform easy for its users to operate and execute.
Disadvantages of a Centralized System
- This platform are prone to hacks and assets lost due to the nature of its centralized system
- There are high bureaucracy bottlenecks in this system which most times delays transaction execution.
- There is also high cost of engaging third party agents like the brokers, auditors etc which isn't seen in the decentralized system with open source feature.
- Users of the centralized system do not have full control of their assets unlike what is seen in the decentralized platform where all keys are granted to the account user.
- This system is prone to server downtime unlike what is seen in the decentralized system.
Which of the System is Better For Business and Why
I will recommend this type of system to any well doing business. Theses are my reasons;
- It reduces overhead cost incurred in the use of a centralized system where it seen to hire additional professionals to help facilitate other processes hitherto would have been handled by the decentralized platform. This professional or third party agents may include auditors, brokers, accountants etc. It removes the activities of third party agents completely which saves assets spent.
- It encourages transparency in its system where all transactions done are open source for public view and assessment. This does not only portray high level integrity on the side of the blockchain but also boost the confidence of investors who would want to invest their assets into the business.
- Issues pertaining to hacks and loss of assets are drastically removed from system so far keys are well secured. This would also ensure safety of assets at all times.
How Do I Know That a Blockchain is Decentralized
- This process can be quickly initiated by visiting https://etherscan.io
(I will be testing for Uniswap)
(Contract address for Uniswap: 0x1f9840a85d5aF5bf1D1762F925BDADdC4201F984 )
- Input the Contract address of Uniswap and click on the search icon.
- Click on the contract details icon as displayed on the image.
- Then, Search for function destruct.
From the search, I could not find any function destruct which simply means Uniswap is a Decentralized protocol.
*In conclusion, it was good to take into cognizance the difference between a Centralized and Decentralized systems, noting the strength & weakness and how it's applied in businesses. In addition, knowing how to determine if a token is decentralized or not is worth the move so as to help an investor make his decision.
Thank you prof @yousafharoonkhan, this is my entry.