ZoneBitcoin EditorialIn crypto vocabulary, the concepts of centralization and decentralization often come up. A network can then be centralized or decentralized depending on whether its central server is controlled by one participant (server) or several.
Let's see the difference between the two terms in order to better understand what it is. We will also ask ourselves what are
What is a centralized network?
We speak of a centralized network when it is controlled by a centralized authority. This can be a single individual or a company. Typically, it is this centralized authority that is responsible for maintaining the network, managing user data, and setting rules and regulations.
The key thing to remember is that in a centralized network, the architecture is built around a server single where all important processes are executed. So when this single server goes down, the entire network suffers. Among the most popular digital platforms that we interact with every day, Facebook and YouTube are centralized. That is to say that they are managed by a central entity (the company).
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How does a centralized network work?
As stated in the introduction, in a centralized network, only a central server manages the main data processing and network management functions. This server is responsible for storing all data and running all processes on the network. It can be located in a single location or spread across multiple locations.
In case the server is distributed across multiple locations, workstations within the network, having less processing power, connect to the central server. Instead of directly executing specific functions (data storage, applications, etc.), these workstations submit their requests to the main server for processing. This generally hasrobust computing power et huge storage capacity. It also has a high-speed Internet connection. These make it possible to manage a large number of users and a lot of data traffic.
What are the characteristics of a decentralized network?
Unlike the centralized network, a decentralized distributed network is not controlled by a central authority. Control of it is distributed among its users. There is no single server or centralized authority. The decentralized network is managed on a peer-to-peer basis. That is to say that each user exercises power over the control of the network.
The indisputable example of a decentralized network is the Bitcoin (BTC), after some observers claim that the Internet is moving towards centralization due to the monopoly of the big names in the space – Google, Facebook, WordPress, etc.
In fact, data on the Internet is concentrated in the servers of these major players. So, most of our activity on the web goes through one of them. This is what will change (most certainly) with the advent of 3 web, which aims to be more “decentralized” precisely.
How a decentralized network works?
Rather than relying on a single central server managed by a centralized authority, a decentralized network distributes information processing tasks across multiple devices often called "nodes."
So, even if one of the nodes goes down or is hacked (attacked), the remaining servers can continue to grant users access to data. Therefore, the entire network will continue to operate without interruption.
It is on this model that the Bitcoin (BTC) this first cryptocurrency created in the aftermath of the financial crisis of 2027-2008 (“Subprime crisis").
The goal was to free ourselves from the shackles of traditional finance and put financial power back in the hands of the people.
Satoshi Nakamoto (the creator(s) of Bitcoin) realized that as long as there is a single point of control or failure, the entire financial system remains at risk.
Recent technological advances have equipped computers and other devices with large amounts of processing power, which can be synchronized and used for decentralized computing. This is what makes decentralized networks possible.
What are the fundamental differences between the two types of networks?
Beyond locus of control, the main differences between centralized and decentralized networks undoubtedly lie in what they represent.
In simple terms, a centralized network is used to maintain control and stability. On the other hand, a decentralized network is oriented towards more freedom of collaboration between users.
The clear differences between the two networks are presented in terms ofinvolvement of third parties, transparency, security, scalability as well as exchange fees.
➡️ In a centralized network, a third party or intermediary is necessary to facilitate communication between different nodes. Whereas there is no need for a third party in a decentralized network. Each node can communicate directly with all other nodes in the network.
➡️ In terms of transparency, centralized networks appear less transparent because all data and information is stored in a central location. Decentralization, however, increases transparency through distributed ledger technology.
➡️ For the safety, centralized networks are more vulnerable to attacks because hackers only need to target a single central point to destroy the entire system. Decentralized networks are more secure because even if one node is compromised, the others are not affected and the system continues to run.
➡️ In terms of scalability (scalability), centralized networks are easier to scale simply by adding more servers to the system. This is more difficult to achieve with decentralized networks because each of their nodes must be able to handle more traffic.
➡️ As for Foreign Exchange or Transaction Fees, centralized networks have higher fees due to more intermediaries involved in the process (case of banks and other payment networks). As these intermediaries are not present in decentralized networks, this results in lower fees.
What is a distributed network?
A distributed network does not have just one centralized host but multiple owners of a network. Distributed networks are composed of interconnected nodes. Resources are then shared equitably throughout the network.
The concept of distributed networking is that it works with collective collaboration across the entire network. Individual nodes have exactly the same access to network data. The distributed network selects a consensus mechanism to get all participants to agree on tasks and executions.
Distributed networks are very close in idea to decentralized networks, very often on a larger scale.
What is the difference between a blockchain and a DLT?
A DLT (Distributed Ledger Technology) means distributed ledger technologies in French. A blockchain is in fact a type of DLT. They can be confused in popular language although they are not exactly the same thing. Let's say that blockchain is the best known form of DLT. Confusing the two is like confusing the terms Nutella and spread.
To put it more clearly, a DLT is a decentralized database that will be managed by several participants at the same time. No central authority will act as an intermediary or control agent.
Final word on decentralized networks
In conclusion, each of these two networks has its advantages and disadvantages. It is the duty of each user to define their objectives.
The merits of a centralized network are a clear chain of command, inexpensive setup, and easier delegation of tasks. However, this offers less freedom and its security can be easily compromised.
Decentralized networks, on the other hand, are immutable, censorship-resistant, and provide users with complete control and security.
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