Advantages And Disadvantages Of Blockchain
Blockchain technology plays a critical role in various businesses in this era. Blockchain technology was introduced for cryptocurrency systems like bitcoin and has now taken over numerous sectors in different forms.
Blockchains are decentralized, secure, and have distributed data. These critical characteristics of blockchains make them stand out and more preferable to other database systems. However, we know that every coin has two faces, the same as in the case of blockchain technology.
Today in this article, we will discuss the advantages and disadvantages of blockchain technology to make it easier for you to understand its characteristics even better.
Advantages of blockchain technology
We have already covered the critical features of blockchains in our article. In this session, let’s discuss the advantages of blockchain from the perspective of a user or a business.
- Open to use
Blockchains are open for everyone to join, participate or use the network. In simple words, we can say that any blockchain node can use this network for peer-to-peer transactions without the fear of security. As mentioned before, blockchains are decentralized networks. Henceforth you don’t face any authority issues or intermediate between the use.
The demand for public and private blockchain technology is increasing daily and getting adopted by businesses and enterprises because of its versatility and ease. However, all blockchains are not open for all; they may vary depending on their type. For instance, public blockchains are available for all, while private blockchain is only for pre-authorized limited nodes.
- Allows verification
Blockchains have an appropriate feature called distributed ledger technology. DLT ( distributed ledger technology) means that every information recorded, updated, or added in the block is directly sent to every network node.
Once the nodes receive that data, you can tell the blockchain operators they verify them. This information or data, like money, securities, assets, etc., are updated or permanently recorded on the block only if it gets validation from most nodes.
This verification allowance solves protection issues. Furthermore, the transparency and high peak security help to keep an eye on the records without extra effort.
Blockchain is famous for its immutability feature. In simple words that no-one is allowed to alter, change or update data once it gets validation from nodes and is recorded on the block. The data stored on the blockchain remains permanent.
If you are looking for an online platform to store your assets, ownership, and transaction records safely and permanently, then blockchain is in the rescue.
The word Blockchain and decentralized can always be seen together. A networked network means no government or company handles and controls the network. And blockchain is one of those decentralized networks.
A decentralized network helps users to work more efficiently and save time. Whether we talk about making decisions or taking time, Decentralisation becomes the critical hero of the topic.
The advantage of a decentralized network is it is faster than a regular database as it doesn’t have any center place to interact and verify the data. All transactions of money and information are directly from peer to peer. And this not only saves time but also lowers the security risk.
In most blockchains, data is structured or functioned like DLT (distributed ledger technology), and the bundle of information moves around numerous devices. Giving access to data to many people can directly harm privacy and may become the reason for big problems.
However, blockchain has covered it all. Blockchains are versatile; you can limit access to your data by private blockchain or any other type of blockchain technology to maintain privacy and choose your blockchain nodes by the pre-authorization method.
Besides this, blockchain’s immutability and irreversible hash features strengthen the security more and make it difficult for hackers to break the puzzle to get access or crash your network.
A distributed ledger is a key technology used in most blockchains. Due to this feature, all entered or recorded data are sent to multiple nodes’ devices in seconds simultaneously. And this means that all nodes can view the information simultaneously while providing complete transparency in the network.
Transparency is essential as it helps in verifying information before uploading it on the block and racing the changes, if any, made in seconds. Transparency helps in building trust and keeping data accurate without any third-party involvement.
Disadvantages of blockchains
As we have covered the advantages of blockchain technology, let’s spotlight these disadvantages.
Storage problem in blockchains has become a gossip and a big problem for users. Blockchain network works in DLT (distributed ledger technology) format, which means that every data or information must be shared with every connected user or device.
For example, there are 200 nodes or devices in your blockchain network, then 200 copies of single data are created and sent to the users. And in the end, we can conclude that the more data and users are added to the network, the more required storage.
Besides this, the storage capacity of each “block” in this block also plays a vital role in storage. The power of each block is limited and records or stores data as equivalent to its ability only. In other words, we can say that blockchain makes a long chain of different blocks connected even for basic information, as the storage capacity of each “block” is limited to only 1 MB( it may vary depending on the blockchain)
As mentioned before, blockchains were introduced in the digital world with the arrival of Bitcoin currency. Therefore, It wouldn’t sound wrong to say that blockchain technology arrived only a decade ago and got attention in recent years. Hence, this technology is still in its developing stage, and it requires time to get mature and better.
Besides this, we haven’t noticed any significant change or development in it till today. Whenever we take any new association or technology, we make sure it doesn’t require updates too frequently and has the back of any expert to solve the problem. But blockchain technology has demerits in both points.
Blockchain technology came into existence in 2008 and established its use and respect recently. And these points directly indicate that getting a well-experienced blockchain developer and customized blockchain technology based on your business isn’t an easy task.
- Energy consumption
No matter what kind of technology you use, energy consumption is a common and essential element in making changes or causing things to happen. As it’s evident that even blockchain requires energy to work, but most people ignore the question, “how much?”
The energy consumption in blockchain technology requires more energy due to its working algorithm. The distributed ledger system in blockchain increases the chances of risk as information and power are getting passed peer-to-peer without any restrictions.
To solve this issue, blockchain uses mathematical calculations. These mathematical calculations are essential for verifying transactions. And as more nodes get added, the more tough mathematical analysis gets. Thus, energy consumption increases timeously.
- Legal issues
Blockchains are still a new concept in the digital and technological world. And due to its interaction and early phase use in cryptocurrency, many made legal barriers o its services.
Many government authorities have banned blockchains and cryptocurrencies due to financial insecurity and other problems. Hence, if you are considering blockchains for your business, make sure it meets your country’s or your location’s legal guidelines.
Before making any final decision, it is essential to know and understand completely. This may take more time, but it can save you from more significant trouble. The disadvantages of blockchain are the least discussed topic. And this doesn’t surprise me anyway.
As many people look at the merits or pros and make an optimistic assumption about it in their mind. At the same time, they were negotiating the cons or demerits of it irresponsibly. Hence, In the above article, we have covered both the advantages and disadvantages of blockchain technology which every beginner must know before considering.