Centralized

dani0661 (63)in Tron Fan Club • 6 months ago

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Centralized System

In centralized system, there is a specific central authority or entity who controls the system, In Centralized Crypto Exchanges, users funds are in control of the exchange, You have to provide KYC verification in centralized system.
3rd parties can be involved in centralized system like regulatory bodies, Centralized system is more vulnerable to hacking and data theft, There is chance of single point failure in case any operator in centralized system do harm to system.
It is very easy to use interface on centralized exchanges, Transaction fees are higher in centralized exchanges, Centralized systems have higher liquidity pool.
Centralized system data is stored on main server and can be manipulated by powerful people, Centralized system scalability is low because data is stored on single server.

Advantages of Centralized System

Easy to Use:

The biggest advantage of this system is that it is easy to use, popular cryptocurrency exchanges are centralized and easy to use.

High Liquidity:

Centralized exchanges have the largest liquidity pools and it is very easy to buy or sell any asset because there will always be enough liquidity to fill a transaction.

Chain of Command:

There is a proper hierarchy and chain of command in a centralized system and everyone has a specific role. This leads to better work in an organized way.

Lower Setup Fee:

Centralized systems have lower initial setup costs because you don't have to install multiple data servers.

Quick Decision Implementation:

Because there are fewer people or data servers involved in a centralized system, it is easier and faster to implement every decision taken by top management.

Disadvantages of Centralized System

Less Security:

It is more vulnerable to hacking and data theft, constituting a significant drawback. Numerous incidents of data breaches and fund theft have occurred in recent years.

Data Modification:

The data is stored on the main server and any influential entity or person can modify or change the data which would be a question mark on the integrity of any project.

Higher Transaction Fees:

Transactions are relatively higher on centralized exchanges and that is a headache for businesses that carry out thousands of transactions every day.

One Point of Failure:

Centralized systems are trimmed to a single point of failure which means that any operator in the network can compromise the system and the entire system will suffer from it.

Limited Scalability:

Most centralized systems are based on a single main server and it is very difficult to scale a business.

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