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Blockchain Guide & Analytics

Decentralized financial system

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Recently, Bin Talal, a Saudi tycoon was house arrested and his bank accounts frozen on dictates of Bin Salman a  dictatorial leader on his whims and fancies. He was asked to shell out $7 billion for his release.
This is the classic case in which it is profoundly established that centralized financial system can be exploited by unscrupulous elements. Events like freezing bank account both at a retail and institutional level have happened many times in history across the globe and by all accounts will continue to happen in future for valid or invalid reasons.In a decentralized financial system, the process is such that activities are distributed and delegated away from central, authoritative location. Therefore no one individual or institution has the power of control over the system. Hence undue exploitation by vested and motivated interests cannot happen.
In a centralized system, the transactions are regulated by the central agency. This gives them absolute power to manhandle your account if they so desire. However, if the system is decentralized no one will have the power to exploit.
Moreover, in a centralized system, there is a single server through which all transaction filter. This feature makes the system eminently vulnerable to attack by hackers. The world is riddled with hackers who can do this and get access to personal data which they can easily exploit.
Very recently In India and elsewhere, there was a sensational case of ransomware where hundreds and thousands of people were duped.
Decentralization not only helps in a full proof security of data but also reduces the cost of transacting exorbitantly. Every time one transacts, say for example a transfer of money in banking system, a transaction fee is charged. The cumulative figure of these undue charges amounts to billions of dollar. This is not the case in the decentralized system.
At times people have been left stranded on holidays when the banks are closed and the urgent transaction cannot occur. In a decentralized system, transactions occur 24*7*365.
Decentralization also ensures no or less regulation which ensures that the value of the transaction is not diluted as is the case with currency notes where central banks can tinker with the value of the currency. Lately, in India, the entire currency was demonetized which meant that the currency you were holding was invalidated. Such arbitrary use of imposed discretionary power is undone with a decentralized system.
The other use of the decentralized system is no country barriers to demarcate.Transactions can be carried out without going through the regulatory bottlenecks within a split second. This feature not only removes intermediation but also accelerates the transaction.
Moreover, with decentralized technology like blockchain, the data is completely secured as it is immutable and hacking free.

Therefore, in a nutshell, the decentralized system offers a plethora of advantages over conventional centralized system most important being financial freedom and anonymity

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