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Centralized Meaning

Centralisation refers to a system structure in which decision-making authority, control, and operational power are concentrated in the hands of a single entity or a small group of actors. In centralized systems, this governing authority determines rules, validates actions, manages resources, and enforces outcomes. In traditional organizations-such as governments, banks, or corporations-centralisation enables efficiency, clear accountability, and fast decision-making.

A centralized entity can coordinate activities, resolve disputes, and implement policy changes quickly without requiring broad consensus. This structure is particularly effective in environments that prioritize speed, compliance, and operational consistency. However, centralisation also introduces structural vulnerabilities.

Because authority is concentrated, centralized systems are exposed to single points of failure. If the central authority is compromised-through technical failure, corruption, coercion, or attack-the entire system may be disrupted. This risk is a key reason blockchain technology emerged as an alternative architecture.

In the blockchain context, centralisation is often framed as a trade-off. While decentralised networks aim to distribute trust and authority across many participants, some degree of centralisation can improve scalability, usability, and governance clarity. Many crypto platforms intentionally adopt partial centralisation to balance user experience with security.

Critically, centralisation also affects transparency and censorship resistance. Centralized authorities may restrict access, reverse transactions, freeze accounts, or enforce selective participation.

While these powers can be beneficial for fraud prevention and compliance, they contradict the trust-minimised ethos of permissionless blockchain systems. Understanding centralisation is essential for evaluating crypto platforms, as it directly impacts custody, governance, resilience, and regulatory exposure.

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Important Disclaimer:

Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

Finery Markets’ software is non-custodial and is provided exclusively to licensed institutional entities that act as independent operators of their own environments. All counterparties are solely responsible for establishing and maintaining their own bilateral trading and settlement relationships. Finery Markets is not a party to any such arrangements and assumes no responsibility for the conduct, verification, or compliance obligations of any users of the software.

Nothing on this website shall be construed as a financial promotion, investment advice, or an offer to engage in regulated activities. Access to and use of the software is strictly limited to clients who have entered into a software licensing agreement with Finery Markets. Persons located in jurisdictions where such access is restricted should not rely on this website or any of its contents.

Additional notice to UK visitors: This website and associated communications are not intended to constitute a financial promotion under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) and related guidance. Access to services provided by Finery Markets is limited to regulated entities, professional clients and eligible counterparties as set out by the Financial Conduct Authority. UK users are not permitted to use this website for the services of Finery Markets if they don't fall within these categories.