If you ever heard about Ripple, Ethereum, Litecoin and Bitcoin, you’d know about the ins and outs of cryptocurrencies. Also, you must have heard about the centralized and decentralized platform whenever you’ve talked about blockchain technology. Decentralization is an extremely vital feature of the digital currency which is not only protected but also quite economical. So, let’s understand what’s centralized currency, what is decentralized currency and its advantages.
What’s the Centralized Currency?
Definition of centralized Currency is, “the concentration of control of an activity or organization under a single authority.” Which reflects centralized platforms there is a single point of contact also known as private hub. Moreover, centralized currency is regulated by the nation’s central bank. All the important decisions on the centralized currency are taken by the according to the goals for instance increase or decrease of the supply.
What is decentralized Currency?
Decentralization can be explained as, “the movement of departments of a large organization away from a single administrative center to other locations.” Which clearly shows there are multiple points that do the work on their own and the way they want aka P2P (peer-to-peer) network.
Cryptocurrencies can be considered as the best example of decentralization. Crypto works on the decentralized platform as opposed to centralized central banking systems, digital money and electronic money. The first decentralized cryptocurrency was Bitcoin which was introduced back in the year 2009. However, since then there are many cryptocurrencies both centralized and decentralized.
Advantages of Decentralized Currency:
Decentralized Currency has tons of benefits as compared centralized currency. So, let’s have a look at the advantages of decentralized currency.
No Involvement of third parties:
Without any involvement of the third party, you get the complete control of your money and you can spend it as per your requirements and wishes. Keeping your money in your wallet makes you master of your finance and you don’t need to trust anyone to make any of the transactions.
There are some of the coins that come with the capability of keeping you anonymous. However, not all the coin has the same capabilities and abilities. Moreover, Bitcoin is counterfeit that shows users are not getting the accurate and complete information about who you are on the blockchain, but the user does have some idea about it.
If you’re transferring money by using the traditional banking system, then it is going to quite pricey. Furthermore, banking system like debit and credit card firms also charge a high cost for providing their services. However, decentralized currencies transactions are not only economical but also borderless.
Decentralized currency along with the cryptocurrency is easily approachable. As decentralized currency has an easy access that means it doesn’t require any withdrawal tool and business account. However, you will be needing a smartphone and internet/Wi-fi connection to access it.
As decentralized currency relies on NSA formed cryptography which helps you to get protected transactions. Apart from wallet owner, no one is able to make any money transaction from the wallet, except cybercriminals.
There is no place for the third-party and middleman is required for the cryptocurrency which will make the settlement fast and quick. Wherein the blockchain technology eliminates the chances of delaying payment of fees. Decentralized currency provides the immediate transfers and takes less time to perform the settlements.
Avoid Identity Fraud:
When the dealer has the access to your financial information such as your debit and credit card, then they have access to your complete credit line. As credit card works on pull mechanism where the payment is pulled by the designated amount from the account wherein crypto works on push basis which gives the power to the crypto holder to use any mechanism without sharing the information.
To Sum It Up
Decentralized and centralized networks are a part of the popular platform. However, not every cryptocurrency is decentralized. IOTA, Ripple, and NEO are some of the good examples of centralized cryptocurrency. BitTorrent and LimeWire is the best example of decentralized.
Advantages of decentralized currency don’t guarantee the fewer perils. However, it reflects that like every other financial platform, it also contains some of the drawbacks if you don’t have the proper knowledge.
When you’re prone to cybercriminals, then there is a high possibility of losing your wallet. So, need to make sure you have a backup of your digital currency or you can get your hands on the digital currency by using the correct credentials because if you lose your digital coins that means you may not be able to get them back by any means.