Centralized vs Decentralized Currency
Have you listen to term centralized and decentralized and confused what is it? And how it is related to cryptocurrencies. If yes then this article can be useful for you.
What does term centralized and decentralized actually means?
So first we have to understand the term centralized and decentralized .
So if anything comes under a particular central authority that defines a various set of rules and regulation related to that particular thing and every single person those are using that thing have to follow those rules and regulation so these kinds of thing can be termed as centralized.
In case of decentralize term if anything does not come under any centralized authority, community or Government. And every single rules and regulation regarding that is defined by their community who are using it. So we can say all these kind of things can be termed as decentralized.
So now as we are familiar with both the term centralized and decentralized let's move to the next point which is centralized currency and decentralized currency.
Centralized Currency :-
Any currency which comes under a central authority who decides its values, rules, and regulations.And people who are using that particular currency have to follow those rules and regulations. So these currencies can be termed as centralized currency. For example in INR is the centralize currency of India which governed by RBI (Reserve Bank of India) and only RBI can decide all the rule and regulations related to INR. So if you are an Indian citizen you have to follow rules that are set for INR by RBI. In addition to this, every country has their own centralized currency for example dollar the US and yen for Japan.
Decentralized Currency :-
Any currency which does not comes under a central authority.And people who are using that particular currency have rights to use it as they want too. And also they are not supposed to follow any particular country rules for using that currency. Hence these currencies can be termed as decentralized currency. For example, we know that cryptocurrencies are the decentralized currency because cryptocurrency does not belong to any particular central authority.So this means suppose if you have any cryptocurrency and any government bans it in their country then it does not mean that it banned in all over the world. Even in that case too you are free to use your coins in any other country where it is being allowed to use.
So now you might be thinking that if cryptocurrencies do not belong to any central authority then who decided its values, rules, and regulations.So as we know cryptocurrency is based on cryptography.So the rules of cryptocurrencies are predefined on the basis of cryptography concepts. and its values are decided by the user of cryptocurrency also termed as buyers and sellers.Also, the value of cryptocurrencies is depended on its demand and as we know the basic demand and supply rule. If the demand for anything increases it value will be also increased. The same thing happens with cryptocurrencies as the demand of any cryptocurrency increases its value will also increase.
Centralized Currency vs Decentralized Currency
It's a great idea to know the difference between anything you are using. SO here are some point you might consider to know the major differences between centralized currency and decentralized currency :-
1:- In case of centralized currency if you travel to any other country first you have to exchange your currency for their currency. But in the case of decentralized currency, you are free to use your money anywhere in the world where it is being used. Without exchanging it with any other currency. And also cryptocurrency values are almost same in all over the world.
2:- In case of centralized currency if you own any currency its price will be always same over the years, for example, today the value of 10 Rs. note will always 10 Rs even after so many years. But in the case of decentralized currency, it values always fluctuate according to their market and demand sometimes it increases a lot and sometimes it decreases too.
3:-Centralized currencies are also termed as Physical currency because we can touch and see it. But decentralized currencies is only available on the internet and it can be touched or seen. Hence, we can also term decentralized currency as virtual currencies.
We hope this article helped you learn about centralized and decentralized currencies and their differences.
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