Blockchain is a digital record of transactions. it consists of blocks that are linked together in a single list, called a chain. Blockchains are used for recording transactions made with cryptocurrencies, such as Bitcoin, and have many other applications. There is centralized and decentralized blockchain we will discuss the difference of each in this article.
Centralized vs Decentralized Blockchains
The biggest factor that differentiates decentralized blockchains from centralized ones is the pool of nodes that can participate in the network, and make administrative changes to the network. most blockchains don’t achieve full decentralization and absolute transparency. Research has shown that in reality, only a handful of individuals contribute to setting and enforcing a blockchain’s rules. Underlying many cryptocurrencies, in other words, is a governance structure that is inherently centralized.
Centralized Blockchains are typically more restrictive in who they allow making changes to the ledger as they use the blockchain for the internal records. Advantages of Centralized Blockchains.
- offer much more customizability and control over the network to the organization deploying it as they can decide who gets to participate in the network.
- many resources have to be invested in competing to secure the network which makes Centralized Blockchains more environment-friendly compared to their Decentralized counterparts.
- they have higher overall throughput because they get to decide the hardware that the network runs on.
- This allows using the incredible power of blockchains without having to make the sensitive information public.
Disadvantages of Centralized Blockchains
- It only requires a few of the nodes hosting the network to collude by amassing enough resources to hack the network.
- transactions are not publically viewable, it is harder to verify the authenticity of the transactions for an outside party.
- private ledgers are not available for public use, they are of little use to anyone besides the corporations that deploy them.
Decentralization blockchains storing data across its peer-to-peer network, the blockchain eliminates a number of risks that come with data being held centrally. The decentralized blockchain may use ad-hot message passing and distributed networking. Advantages of Decentralization
- the security associated with operating on a trustless system.
- cybercriminals have gotten into a centralized crypto exchange, there’s little that can be done to stop them from pillaging coin wallets until there’s nothing left.
- users keep the private keys to their digital coin wallets.
- No third party can access your information.
- Quick transactions globally.
- Cheap transactions globally.
- Transparent everyone can see the transactions that have taken place on the network.
- No central point of failure.
Disadvantages of Decentralized Blockchains
- public blockchains like Bitcoin are susceptible to all kinds of analyses that can reveal more information about the network participants making the blockchain less private.
- The massive amount of miners mining on the network means that difficulty needs to keep increasing thereby leading to mostly useless computations done by miners to outcompete each other.
- estimated that every Bitcoin transaction costs about as much electricity that is required to power an average home for eight days.
- public ledgers are not very environment-friendly.