Case Studies

Centralized vs Decentralized vs Distributed Systems

December 6, 2021

The business and enterprise sectors are dotted by a diverse range of companies, each with its unique business model and offerings, but if we take a quick peek under their hood, we can observe that all of them share a common element, namely an IT infrastructure that acts as the invisible framework which supports companies and enables the delivery of their services. As early as the 1950’s technology has started to leave its mark on the business world, eventually becoming the main vehicle that supports and facilitates business. As a matter of fact, technology and the business sector share almost a relation of symbiosis, in which they influence each other’s evolution and growth.

Today, centralized, decentralized, and distributed systems have cemented themselves as the main types of frameworks that act as a foundation for every company and application from the enterprise sector. Unsurprisingly, the prevalence of these three models has given rise to the following debate – Which one of them is better, or more suited for the constantly evolving needs of the enterprise sector? The answer isn’t straight forward, because each model comes with its own set of advantages and disadvantages that need to be accounted for.

As a technology provider, Modex leverages blockchain technology to forward an alternative that combines the benefits of distributed, and decentralized systems, while minimizing the technological complexities and overhead that comes with these types of systems, augmenting them even further with an additional suite of functionalities and features tailored to answer the needs of the enterprise sector.

Centralized systems overview


On the software’s business logic side, centralized systems are designed following the traditional client-server architecture, where a single, centralized server is responsible for storing and processing all the information, which it needs to make available to other users, known as client nodes who can connect directly to the main server and submit data requests instead of performing them directly.

Being one of the first types of systems to appear, the centralized model is widely used especially on the web. The main issue with this type of network is its dependence on a central server which acts as a single point of failure, a big target that can be exploited by malicious actors.

Advantages of centralized systems

  • Fast and simple deployment – their straightforward design and clearly defined roles in the system significantly cuts down on deployment times of decentralized systems, making them ideal for small business applications, centralized databases, or testing environments.
  • Cost-effective – centralized systems are usually the ideal choice for smaller systems because they require fewer resources to set up and maintain. Because they rely on a single server, admins need to perform updates only in a single place, which drastically reduces the time and overhead necessary to keep the system updated.
  • Consistency – centralized systems have a top-down structure which makes it easy to standardize the interaction between the server and the client nodes which enables companies to provide a more consistent and streamlined experience to end-users. Also, due to the clearly defined roles in the system, it is relatively easy to track and collect data, making the detection of deviant user behaviour more efficient.

Disadvantages of centralized systems

  • Increased risk of downtime – the single point of failure vulnerability inherent to centralized systems means that if the central server is compromised, the entire network will shut down. As a result, client nodes will be unable to send, receive, or process user requests. Also, maintenance and update operations will most likely involve a downtime period in which users will not be able to use the company’s services.
  • Weak security – the single point of failure vulnerability paints a big target on the central server, making it susceptible to a wide range of cybersecurity attacks like Distributed Denial of Service attacks (DDoS) where malicious actors flood the system with many false requests to make the services unavailable to other users. Another point of concern is the fact that data is stored only on the central server, which raises privacy risks and chances of losing data if the server is corrupted.
  • Limited scalability – from a scalability standpoint, centralized systems can scale only vertically, meaning that the central server can be upgraded with better hardware components. The problem is that this technique is limited by the performance of the hardware components available on the market, which is often insufficient for technological companies that require a large pool of computing power to cope with their workload. If the system experiences traffic spikes beyond its capabilities, some users may experience increased latency, becoming unable to access information or services.
Vertical scaling

Decentralized systems overview


As the name implies, decentralized systems do not rely on a single server like centralized systems, instead, they distribute the workload across multiple devices. Each separate device can be configured to act independently and are usually categorized into server/master and computer/slave nodes. Having multiple master nodes mitigates the shortcomings of single point of failure systems because if one or more master nodes fail, the remaining ones can take on their workload and maintain the system active without any disruptions. It’s important to note that decentralized networks don’t distribute data storage and computation evenly across the network, hence the master/slave node differentiation. Even so, they are more resilient than their centralized counterparts.

Advantages of decentralized systems

  • Fault-tolerant – decentralized systems are composed of multiple hardware components that make it less likely for a company to experience any downtime due to a hardware malfunction. In this scenario, decentralization enhances a company’s logistic and operational performance by increasing the availability of data to satellite offices as well as providing continuity to business operations in case of a failover scenario where the primary database malfunctions or is compromised by an attack.
Fault tolerance
  • Enhanced security – decentralized systems mitigate the single point of failure vulnerability present in centralized structures, while also increasing a system’s resistance to cybersecurity attacks.
  • Collusion resistance – unlike centralized structures, it is more difficult for participants in a decentralized structure to collude to act in a way that will benefit them to the detriment of other participants. This can be a valuable aspect in a consortium of companies because it creates an equal playing field that has an inbuilt system of checks and balances for the actors involved.
  • Enhanced performance – master nodes can be distributed geographically in areas where user activity is high, making information more accessible to users
  • Increased scalability – besides vertical scalability, distributed systems can benefit from horizontal scaling. Also referred to as scaling out, horizontal scaling is a technique employed in distributed systems to increase the computational power of the network by adding new nodes, rather than upgrading the hardware of a single node. Besides being a cheaper alternative to vertical scaling, the main advantage of horizontal scaling is its seemingly infinite potential to add new machines to the network to increase performance.
Horizontal scaling

Disadvantages of decentralized systems

  • Expensive to set up and maintain – unlike centralized systems, decentralized systems are more complex and require more technological overhead making them more labor-intensive and expensive to maintain. As such, they aren’t for smaller systems because of the low cost/benefit ratio.
  • Coordination issues – decentralized systems are composed of multiple master nodes that act independently and may not communicate with each other. This design choice can make it difficult to coordinate nodes to work on a collective task, reducing the versatility of decentralized systems.

Distributed systems overview


Distributed systems have appeared out of the need to solve increasingly complex computational problems that cannot be solved by a single machine. Often than not, distributed systems are very difficult to deploy, maintain, and debug, but they are worth the effort and costs involved due to their performance, scalability, low latency, and fault tolerance.

Distributed systems are characterized by two key features. The first one is that distributed systems are a collection of computing elements, commonly referred to as nodes, that can act independently of each other. As opposed to decentralized systems, every node in a distributed system is equal, meaning that data ownership and computational resources are shared evenly across the entire network.

The second common feature shared by every distributed system is that due to the layers of abstraction involved, users tend to believe that they are dealing with a single system. To function as a single cohesive system, the collection of autonomous nodes needs to be able to communicate and collaborate with each other to achieve a common goal. As such the key challenge toward building a distributed system is related to ensuring and maintaining a stable line of communication between all the elements that compose the network.

Advantages of distributed systems

High availability system
  • Reliability and fault-tolerance – distributed systems are composed of multiple nodes that work towards achieving a common goal. Because of this design, the system is reliable and highly fault tolerant. Even if some of the nodes that compose the system are compromised, the application will continue to function because the workload will be spread between the remaining nodes.
  • High up-time – this metric refers to the total amount of time the system is available. In general, distributed systems are characterized by high levels of availability. Because they are composed of multiple machines, distributed systems can distribute the workload during maintenance procedures to ensure business continuity.
  • Low latency – latency measures how much time it takes for a data packet to travel from one designated point to another. Ideally, latency should be as close to zero as possible. The advantage of distributed systems is that nodes can be distributed geographically, to allow traffic to hit the node that is closest to it.
  • High scalability – distributed systems can scale vertically and horizontally
Low latency

Distributed systems disadvantages

  • Expensive to set up and maintain – distributed systems require multiple hardware and software devices which increases the initial setup costs and maintenance costs.
  • Data loss – data can get lost in transit between nodes.
  • Difficult to manage – distributed systems are characterized by high levels of complexity, requiring specialized personnel to operate them.
  • Overloading – overloading is a common issue of distributed systems that happens when all the nodes of the distributed system try to send data at one particular instant of time. Overloading impacts a system’s response time.

The Modex alternative

Modex has leveraged blockchain technology to develop the Blockchain Database (BCDB) solution, a new type of infrastructure that combines the benefits of decentralized and distributed systems to create an ecosystem capable of providing enhanced security and data centred benefits. The solution developed by Modex intervenes in the development stack by positioning itself between an existing software application and database system to add a blockchain layer that ensures confidentiality, integrity, and availability.

Simple development

With Modex BCDB companies can move from a centralized model to a decentralized, distributed model, secured by complex encryption and hashing algorithms. In addition, the Modex solution comes with inbuilt customizable data access mechanisms and a separate blockchain authorization network that stores user credentials and passwords, to create an ecosystem inherently resistant to data loss.

Modex BCDB makes use of blockchain technology to extend the concept of data backup. A database connected to Modex BCDB benefits from a blockchain backend that stores the hash of every entry in the database. Due to the unique properties of hashing, if the information is modified in the database without authorization or by mistake, the system will compare the hash stored in the blockchain with the new one generated by the modified information, detect the difference and restore the data to its previous value.

Why Blockchain?

Blockchain is unique in the sense that it has managed to directly challenge our perception of data storage and management. For the untrained eye, blockchain may simply appear as a database, and to some extent they are right. Blockchain is a database, but a database is not a blockchain. In its most basic form, blockchain is a historical record of transactions. Data introduced in a blockchain network is secured through complex cryptographic algorithms and stored in structures called blocks.

Blockhchain a decentralized distributed network

Each block of transactions includes a set of data from the previous block which link them together, forming a chain of blocks. Hence the name blockchain. Because data is stored in thousands of interconnected blocks, it becomes impossible to alter. If a malicious actor tries to tamper with data from a block of transactions, all the following blocks will be rendered obsolete by the system, which will discard any changes which are not approved by the members of the network.

Transparency, trust, and accountability are imposed by the decentralized structure of the blockchain. Businesses and trade partners are no longer required to rely on external parties to mediate disputes, perform an audit, verify, and share data, as the one true version of the truth will be stored in the blockchain. Each participant maintains an encrypted record of every transaction, trust is guaranteed through complex mathematics during each stage of the transaction process. This resilient recording mechanism cannot be repudiated, as such, parties that do not completely trust each other can engage in business interactions.

Modex BCDB, disruptive benefits

With a unique set of characteristics and features, Modex BCDB delivers a set of data-related benefits that extend not only to the beneficiary of the Modex technological layer but also to their end customers, business partners and end users.

No single point of failure

Certifiable trust – Modex BCDB elevates the concept of trust to a whole new dimension. Trust no longer requires people to place their faith in the ability of companies to safeguard their valuable data. With the Blockchain Database solution, trust is guaranteed by technology.

Efficient data reconciliation and audit – integrating multiple database systems and software applications with a blockchain backend facilitates a better flow of information and a higher degree of transparency and trust in data. Transparency generates traceability and accountability, while data trust is guaranteed by the complex technological layer facilitated by the BCDB solution. These two features consolidate and streamline a clients’ internal operational flow. In a multi-party system, trust and transparency creates cohesion and improves cooperation on data.

Improved data accuracy – Modex BCDB removes the need to manually enter data into a shared ledger or exchange information through methods susceptible to human error (email, screen sharing, etc.).

Enhanced data protection & secure data sharing – with blockchain technology at its core, Modex BCDB creates a highly secure ecosystem for sharing and storing data. Security is further strengthened by the complex layer of encryption offered by the Modex platform. The flexibility of the encryption system enables beneficiaries to encrypt all the data entries or only certain fields from a table. As an append-only structure, data cannot be deleted once it has been passed to the blockchain, making it immutable.

Complete data ownership – companies that store their data on the BCDB platform are in complete control and the indisputable owners of the data they add into the platform. As such, they can decide who, when, and how their data can be accessed within the ecosystem.

Data privacy – trust is a fundamental value guaranteed by Modex’s blockchain component. Paired together with the access control mechanisms built in the Modex BCDB solution, the newly created ecosystem ensures that data can be accessed only by authorized users.

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