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Centralization refers to a state where control, decision-making, or data management is concentrated in a single or a few entities or nodes, as opposed to being distributed across a decentralized network. Centralization can impact transparency, trust, and censorship resistance. The Web3 ecosystem aims to reduce centralization by promoting peer-to-peer networks and decentralized governance, ensuring that power and data are distributed among participants, enhancing security and resilience in digital systems.

Centralized systems

Centralized systems involve a structure where control, governance, and data are concentrated within a single entity or a few entities. While offering streamlined management, centralized systems can face challenges related to privacy, censorship resistance, and dependence on a single authority.

Centralized networks

Centralized networks are characterized by a concentration of control and decision-making in a single entity or a limited group. This setup can provide efficient management but may also raise concerns about data privacy, scalability limitations, and potential vulnerabilities within the network."