Decentralized System and Why it is Needed

A decentralized system is needed to solve some of the flaws in the centralized conventional financial system. The main reasons why a decentralized system is needed are;

• A decentralized system is needed to give users full control of their funds - This is one of the huge benefits of a decentralized financial system because there is no central financial system that controls the funds of users. In a decentralized system, users have full control of their funds safely stored in their non-custodial wallets that provided the keys or seed phrase. With this, users can make use of their funds anytime they want and anyhow they like without any central authority controlling the funds.

• A decentralized system is needed for higher security – This is because there is much higher security in decentralization compared to the centralized system. User funds are secured in a secured non-custodian wallet that provides keys. Funds in a centralized system is in the control of the central entity or institution which means that user funds can be at risk if anything happens to the financial institution or financial institution can take control of user funds. Also, in a decentralized system that operates using blockchain technology, data and information cannot be altered which increases security.

• Decentralized system is needed to give power to the users and removing the central authority that makes all the decisions in the system. In a decentralized system, the users make the rules and decisions by reaching consensus. Also giving everyone equal rights in the system.

• A decentralized system is needed due to a reduction in transaction cost - This is also another very good benefit of cryptocurrency over the conventional financial system. At the moment, there is a high transaction cost to send money, especially from one country to another. This has caused a lot of people to look for alternatives to send money which can be problematic and stressful. Yes, there are other means to send money to people from one country to another with a much-reduced transaction cost, however, it would incur another delay before the person cashes out the money as physical spendable currency. With cryptocurrency, there is a much-reduced transaction cost compared to the conventional financial system. Sending money from one country to another is much faster and easier and the person would get the fund in their wallet in less time and can spend it anytime they want.

• A decentralized system is needed for transparency. We all know that one of the flaws of the centralized system is that data and information is not transparent and can be altered or manipulated, however, in a decentralized system, data cannot be altered or manipulated because anything stored on the blockchain cannot be altered or manipulated.

• A decentralized system is needed to eliminate downtimes that can be caused by single centralized servers. In a decentralized system operating on blockchain technology, there are no downtimes because there are no centralized servers, instead, it makes use of multiple nodes that are run by users in the system.

• A decentralized system is needed due to the benefits of uninterrupted payments solutions - This is another very important benefit of cryptocurrency over the conventional financial system. At the moment, there are still delays and interruptions in payments due to network issues or system failure… this can be frustrating to users as the interruptions can lead to loss of opportunities and delayed payments for urgent situations. Cryptocurrency solves these problems because there is no interruption in cryptocurrency payments as everything runs on the blockchain.

• A decentralized system is needed so as to allow users to have full control of their financial decisions and services like in DeFi. In a decentralized system, there is no restriction on financial services like borrowing, lending, staking, allowing anyone to have access to financial services anytime they want at any time.

• A decentralized system is needed because transactions cannot be altered/manipulated - This is another very good benefits of blockchain and cryptocurrency technology. One of the major flaws in the conventional financial system is that transactions can be altered. This means that the transaction record of funds transfer can be altered. However, this is where cryptocurrency shines because any transaction sent on the blockchain from wallet to another wallet cannot be altered and is visible for anyone to verify. This is great because people can send funds safely without any fear of loss of funds through institution manipulation.