Centralised payment systems Flashcards
What is a centralised payment system?
Traditional payment systems like S.W.I.F.T., PayPal, or any national payment system are centralized.
They have an administrator (a central server), which validates or rejects each payment.
What are the risks of a centralised payment system?
Such a system is prone to the risks associated with a centralized architecture.
The centralized server with transaction data can become the object of a cyberattack.
Other risks include, for example, system failures, data leakage and loss of transaction information.
What are some of the features of a centralised system?
Users have to trust the administrator of the payment system.
Not only does the administrator have access to all transactional information but, the administrator can also add, modify or delete any information.
Furthermore, the administrator has the authority to accept or refuse the validation of transactions and can change the history of transactions.
What is the advantage of crypto currency over traditional centralised systems in terms of reliability?
Decentralisation lowers the risk of a cyber attack, as there is no central server.
It prevents malicious acts by the administrator
As long as some nodes are connected to the Internet, the system remains operational.
What is the advantage of crypto currency over traditional centralised systems in terms of ease of use?
You can start using bitcoins in a matter of minutes.
It only requires several clicks to install a bitcoin wallet on your device connected to the internet
transactions are validated in minutes and do not have any geographical limitations or a minimum or maximum amount limit
there is no need to sign anything
you are free to choose software providers, and it is easy to store any amounts of bitcoins
What is the advantage of crypto currency over traditional centralised systems in terms of privacy?
To start using Bitcoin, all you need is just a computer or a smartphone connected to the Internet.
Bitcoin can provide a considerable level of anonymity as it is possible to send and receive bitcoins without giving away any personal identification data.
In our example, the drug dealer communicated using the Tor browser. Such communication and Bitcoin payments can take place in the Darknet.
