Centralized vs Decentralized Crypto Pros & Cons, we are going to explore the main difference and the pros and cons of both so that you have a clear understanding.
I have been asked this question millions of times. Which one do you prefer?
My answer always is the same: Decentralized. I prefer Decentralized because I have full control over my money (See what happened whit the last crypto crush). Then they start with the argument that if it is entirely Decentralized is impossible to regulate. My answer always is: we need to think outside the box and we can’t ask those that centralize everything to do it, is not in their nature. We should take complete control of our finances and create a system that finally benefits all. Even though I know they’re going to be skeptical reading this and say this is a utopia, I can tell you that some very smart people are working on that. The system in the way it works is not functional, we need to change the way we do things and our mentality too.
Before we move on we need to define what both of these terms mean. We are also going to dive deep into the pros and cons of both so that you can make your choice.
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Centralized meaning
It is self-explanatory Controlled by a single authority or managed in one place. Another way to put it is the process of concentrating power and authority in the hands of senior management. So Centralized are controlled by one person or enterprise that guides all the decisions.
List of the top Centralized Crypto: XRP(ripple), NEO, EOS, BNB, CRO. Now let’s see the Pros of a centralized Crypto Exchange.
Centralized Crypto Pros
- Usability: Easier to use than decentralized exchanges. By entrusting transactions to a company and sometimes paying a small fee, users often get the benefits of easy access to their money.
- Liquidity: A major flaw of decentralized exchanges is that they make it very difficult to get cash quickly. Users are often limited on how much they can spend at once and must go through several steps.
Centralized Crypto Cons
The following are the disadvantages of using a centralized exchange:
- Prone to security breaches: Centralized exchanges use wallets to enable their users to gain access to their platform has made them susceptible to attacks from hackers. Many criminals today now target the large volume of funds traded in centralized exchange as a good place to rob.
- Commissions are charged for each transaction: Most centralized exchanges charge some commissions for using their platforms and usually commissions are high.
Decentralized meaning
The dispersion or distribution of functions and powers. to move the control of an organization or government from a single place to several smaller ones. Most cryptocurrencies and their underlying blockchain are decentralized, which means no central authority is in charge. Instead, the power is distributed among the members of any given blockchain or crypto community.
Decentralized Crypto Pros
- Helps to hide the identity of the users: Using a decentralized exchange gives the traders the kind of privacy they desire while carrying out their financial transactions. Most investors and big institutions use the decentralized exchange to hide their net worth to escape government taxation.
- Gives users total control over their assets: There is no central body that controls the decentralized exchange. Hence, users have full control over their assets and can decide what to do with them. The cases of hacking are highly minimized while using the decentralized exchange.
- Helps to surmount government sanctions: Very often, users from those countries where crypto trading is prohibited by the government; consider the decentralized exchange as the best way to overcome those government sanctions. This is because it is very difficult for the government to penetrate it.
Decentralized Crypto Cons
The following are the disadvantages associated with using a decentralized crypto exchange:
- Does not allow the exchange of Fiat Currency: It is not possible to exchange crypto for fiat money using a decentralized exchange. Doing so, no doubt will reveal the identity of the receiver
- Highly Vulnerable: The founders of the decentralized exchange are not known to users. This makes all crypto transfers through them very prone to loss as the anonymous owners can easily abscond with them. Sadly, there is no way to trace them.
- There is no one to complain to in cases of failed transactions: All transactions carried out on the decentralized exchange are at the owner’s risk. No one is available to assist new users or resolve failed transactions.
Factors to consider while choosing an Exchange&Crypto
There are ten major factors one needs to consider while choosing a crypto exchange. The following factors are discussed:
- Regulated
- Multiple options for Deposit and Withdrawal:
- Ease of Withdrawal
- The number of tokens supported
- Commissions charged
- Customer Support Services
- User review
- Years of Experience
- Global Presence
Making a Plan Before You Jump In
You may just want to buy some cryptocurrencies and save them for their potential growth in the future. Or you may want to become more of an active investor and buy or sell cryptocurrencies more regularly to maximize profit and revenue. Regardless, you must have a plan and a strategy. Even if your transaction is a one-time thing and you don’t want to hear anything about your crypto assets for the next ten years, you still must gain the knowledge necessary to determine things like the following: What to buy, When to buy, How much to buy, When to sell. I will make an article regarding that. Always with Crypto is important to watch the latest news and check the daily charts likely we offer that at CryptoNewSmart
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