In the world of cryptocurrency, centralization refers to a system where a single entity or a small group of entities have significant control and authority over the network and its operations.

In a centralized cryptocurrency system, a central authority, such as a company or a government, holds the power to make decisions about how the cryptocurrency functions. This includes setting rules, validating transactions, and managing the network.

Centralized systems come with certain risks. If the central authority makes mistakes, gets compromised, or acts in a way that’s detrimental to users, it can have a significant impact on everyone within the system. Users are dependent on the decisions and actions of this central authority.

In a centralized cryptocurrency setup, users have limited autonomy and must adhere to the rules and policies set by the central authority. They don’t have much say in how the network operates.