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Wireless Technologies and Programming

The document outlines the differences between centralized and decentralized ledger systems, highlighting their respective advantages and disadvantages. Centralized systems offer efficiency and security but are prone to single points of failure, while decentralized systems provide transparency and fault tolerance but face scalability and regulatory challenges. It also discusses blockchain immutability and the 51% rule, explaining how control over the majority of a network's power can compromise the integrity of the blockchain.

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8 views2 pages

Wireless Technologies and Programming

The document outlines the differences between centralized and decentralized ledger systems, highlighting their respective advantages and disadvantages. Centralized systems offer efficiency and security but are prone to single points of failure, while decentralized systems provide transparency and fault tolerance but face scalability and regulatory challenges. It also discusses blockchain immutability and the 51% rule, explaining how control over the majority of a network's power can compromise the integrity of the blockchain.

Uploaded by

theemuga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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(a) Difference Between Centralized and Decentralized Ledger Systems (10 marks)

A ledger system is a record-keeping mechanism used to store financial transactions and other data. The
key difference between centralized and decentralized ledger systems lies in how control and access are
managed.

1. Centralized Ledger System

A centralized ledger is controlled by a single entity, such as a bank, government, or corporation.

Positives:

• Efficiency – Transactions are processed quickly due to a single control authority.

• Security Control – A central authority can implement strong security measures.

• Easier Regulation & Compliance – Governments and institutions can enforce laws more
effectively.

Negatives:

• Single Point of Failure – If the central authority is compromised, the entire system is at risk.

• Lack of Transparency – Users must trust the entity managing the ledger.

• Potential for Manipulation – Data can be altered by those in control.

2. Decentralized Ledger System (Blockchain)

A decentralized ledger, such as blockchain, is distributed across multiple nodes, eliminating the need for
a central authority.

Positives:

• Transparency – All transactions are publicly verifiable, reducing fraud.

• Security – Cryptographic techniques make data tampering extremely difficult.

• Fault Tolerance – No single point of failure; even if some nodes go offline, the network
continues.

Negatives:

• Scalability Issues – Processing transactions can be slower compared to centralized systems.

• Energy Consumption – Some consensus mechanisms (e.g., Proof-of-Work) require large


amounts of computing power.

• Regulatory Challenges – Governments struggle to control decentralized financial systems.

(b) Blockchain Immutability & the 51% Rule (5 marks)

Are Blockchains Truly Immutable?


Blockchains are considered immutable because once a transaction is recorded in a block and added to
the blockchain, it cannot be altered without invalidating all subsequent blocks. This is due to the
cryptographic linking of blocks and the distributed nature of the ledger.

However, in practice, immutability is not absolute. If an attacker gains control over the majority of the
network’s computing power, changes can be made.

The 51% Rule

The 51% Attack refers to a situation where a single entity or group gains control of more than 50% of
the network's mining power. This allows them to:

1. Reverse Transactions – Double spending becomes possible.

2. Block New Transactions – They can prevent other users from confirming transactions.

3. Reorganize the Blockchain – They can rewrite portions of the blockchain history.

While difficult to execute on large networks like Bitcoin due to immense computing requirements,
smaller blockchain networks are more vulnerable.

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