Centralized vs Decentralized difference to understand blockchain
A centralized network like the banking sector holds all the power of data for the network. Other examples are any eCommerce website or social media networks. They control all the power and dedicate access to the users of the network. It is the traditional way and controlled by the founders of the website. Big centralized networks will be controlled by corporates who indeed control all the users of the network.
The centralized network works based on the approval of the network admin. For Example: If you are posting something on social media, it will be posted based on the permission provided by the admin. If you have any abusive or message not supported by the network will be taken down.
A centralized network is a single power source for the network to function. In case of any attack on its network, all the data in the network will be under attack and be vulnerable to system failure.
A centralized network will know the worth of data and will help in protecting the data according to its merits.
In a banking transaction, if A sends x amount to B. The data will be stored in the network. If the A does not have any proof and thinking that the bank will store the information. Bank will have the power to delete the transaction and its proof. A centralized network controls the whole transaction. It’s not necessary that it will happen but the network has the power to do it.
A decentralized network is a process of spreading the power equally to its user or shareholders. The data is controlled by all of its shareholders or users. Blockchain belongs to the de-centralized approach as holders of the coins will share the network equally based on their stack. Data is spread around the network.
Each transaction in the network will be cryptographically validated and store a record of each transaction.
A centralized network is not having any point of contact with a single source. The data will be distributed. If you attack one point, the rest of the points will function almost without any damaged. Hackers need to hack into each user to hack the whole network, which is almost impossible.
Even though the network is secure, the data remains public and we cannot guarantee 100% safe unless data is encrypted. A decentralized network has its disadvantage due to its openness.
In a bitcoin transaction, all the transaction made from the genesis till now is stored. If A transfers x to B, B cannot cheat that the transaction never happened. The transaction will be cryptographically verified and stored in a ledger.