Definition ∞ A centralized entity is an organization or system where a single authority or a limited group holds decision-making power and control. This structure contrasts with decentralized models, which distribute power across many participants. Centralized entities often serve as intermediaries, managing operations and ensuring security for their users. Many traditional financial institutions operate as centralized entities.
Context ∞ In the cryptocurrency space, the role of centralized entities, such as exchanges and custodians, is a frequent topic in news and debate. While offering user convenience and regulatory compliance, their existence presents a single point of failure and counterparty risk. The tension between centralized efficiency and decentralized autonomy remains a central discussion point for digital asset adoption.
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