Difference Between Decentralized and Centralized Applications

Decentralized applications run on a distributed peer to peer blockchain network rather than on a single server controlled by a corporation. Compared to centralized technology, decentralized networks therefore have no single point of weakness.

Without an Achilles heel, decentralization limits the ability of malicious corporations to manipulate information stored on central servers without transparency.

• Imagine a politician using Bank of America debit and credit cards to buy drugs. If the same politician enjoys a professional relationship with Bank of America a conflict of interest may arise. For example, the politician may create beneficial policy for Bank of America in return for having transaction history hidden or deleted from Bank of America’s central server.
• Conflict of interest that may create political moral hazard behavior is impossible on immutable blockchains without democratic approval among elected blockchain validators.
• It is true that decentralized applications rely on cryptography, which allows some users to conduct criminal activity while remaining anonymous, while identification is almost mandatory on centralized apps like Facebook and Gmail. Anti-blockchain evangelists therefore argue that cryptography based applications is a tool for criminals to circumvent justice, which in combination with blockchain’s environmental impact is why many politicians pose that blockchain technology is a danger to society.
• However, arguments like increasing criminality by politicians against blockchain were also used against internet in the beginning of the 1990s. The fact that politicians are worried about blockchain’s criminal and environmental impact on society in combination with blockchain’s current adoption timeline makes the technological adoption of blockchain based application almost identical to that of the early Internet.
• Unlike blockchain technology, the Internet was created through public funding. Although lawmakers actually outlawed Internet in the beginning, they later accepted public use of internet with the caveat that no private person or company was allowed to make money on internet by selling goods and services. It therefore took many years for the public to trust the internet with personal information like credit card information.

Imagining life without Internet today is impossible. Developing public trust and convincing lawmakers that blockchain benefits outweighs consequences is therefore super important and understanding why some stakeholders like politicians may want to limit adoption requires investor patience. If blockchain adoption follows in Internet’s footsteps, the road to adoption will be bumpy, but ultimately a life without blockchain may soon also be difficult to imagine.