Three main systems are used to manage everything we know today. They are centralized, decentralized and distributed system. In this article, we will be discussing the centralized and decentralized systems and highlighting their respective strengths, weaknesses and risks.

Before we begin, let’s define centralized and decentralized systems and have a clear understanding of them.

Centralized System

In a centralized system, one or more client nodes are connected to a central server, directly. This system is the one that is commonly used in the world today. One central server enjoys the utmost power. All transparency is dependence on the central server. All clients send requests to the company’s central server and receive responses. The central system stores all data and user information, which other users can access if permitted. The user information here includes user-generated content, user profiles, and more. This system is easily set up and people can start using it immediately.

Decentralized System

In a decentralized system, there is no central server which means there is no one central owner who can do as they want. This system uses multiple central owners or servers, each of these has a copy of the resources stored with them that the users can access. Contrastingly to the centralized system, it is much harder to compromise a decentralized system as there are many owners with the data. If one central owner collapses, the rest of the data owners can continue to provide data to the users and the system remains intact.

Weaknesses and Risks of Centralized System

A centralized system is prone to failures. Here one system or one owner has all the power and they can change anything without notifying anyone. Since one system holds all power and data, it poses higher security and privacy risks for users as if the central server is compromised, the entire system is compromised. Another weakness of the centralized system is that users who are far from the server have to suffer longer access times to data than those users who are nearer to the central server.

Why a decentralized system exists and what solutions it provides?

A decentralized system exists to provide solutions to the faults and shortcomings of the centralized system. It provides much-needed transparency and engagement to all users and is stronger when it comes to data security. In a decentralized system, there are numerous stakeholders and everyone is aware of the changes that are being made. Power is distributed among everyone and there is no single server that holds all power.

In case one server collapses all resources remain active and continue to operate. This allows the system owners to repair faulty servers while the system continues to run normally. In terms of overall system uptime, a decentralized system provides a great improvement over a centralized system. The access time to the data of a decentralized system is also faster than the centralized system as the owners have the power to create nodes in regions with high user activity.

Centralized Wallets

Centralized wallets function in a similar way that a traditional stock exchange or brokerage account does. Central wallets are owned and operated by a central system and it maintains the ultimate authority over the wallet and transactions done through it. Centralized wallets usually do not have private keys of their exchange account’s wallets. This places the owners at the risk of foul play and mismanagement by the centralized server which is operated by the third party.

Decentralized Wallets

Decentralized Wallets have no central authority over them and are completely decentralized. This is done through the leveraging of the capabilities of blockchain technology. Since it is powered by the blockchain technology, it offers users more financial security and access to data than a traditional centralized exchange.

Here are three benefits of keeping and trading crypto in decentralized wallets.

  1. A decentralized wallet can’t privately save users’ data and sell it to anyone else. So, your data and information are always safe and secure.
  2. In a decentralized wallet, external regulators or governments can’t interfere or breach the data or information of the users.
  3. Decentralized wallets have no central server controlling everything, so there is more financial security here and better access to data than a centralized wallet.

DDK ecosystem

The DDK ecosystem is fully decentralized and is built on strong foundations of the blockchain technology. The DDK Platform is transparent and is very engaging. It keeps all of its stakeholders in the loop and they are notified of all changes. Since nothing is centralized, the DDK stakeholders have the power to vote and stake. It is a unique platform that offers beneficial solutions to people associated with it. It also offers a decentralized wallet that is secure and free of risks and concerns.

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