– Centralized –
The centralized structure consists of a central server controlled by the network owner. An example of a user of this structure is PayPal where all the data is contained in the server and each user to access us use an email and a password. cannot be communicated directly with other users.
What happens when a user sends money to another user? Being a centralized structure, PayPal simply marks in its accounting that the ownership of the money has passed from user 1 to user 2, but in reality the money has not undergone any movement since it is located on the same server shared by the various users.
Instead, the cons is that if the server stops working, making it impossible to recover the data, you will lose everything.
– Decentralized –
The decentralized structure, used for example by Bitcoins and called blockchain, can be represented as if it were a star, where each point is a node and each node is associated with a user.
All users are connected to each other. In fact, every time you connect to the network, you download the entire accounting register which reports all the operations carried out on the network since its inception.
Therefore, since each user has a copy of the accounting register there is no risk of losing this data since, in case a user loses the register, he just needs to reconnect to the network to download an updated version.
In addition it is not hackable because unlike the centralized structure, in which it is sufficient to enter the central server, access the accounting register and modify the information it contains. In the decentralized structure it should be possible to modify the information on each single register downloaded by the various users.
The cons is the lack of an institution that allows you to recover your credentials in case they are lost.
Thanks for reading this comparison.