In making any decisions in life, the first thing you consider carefully is the advantages and the disadvantages attached to make a sensible decision. The same thing goes for Blockchain.
Blockchains are considered to be a decentralised database as it operates as a dispersed digital ledger. These blockchain stores and record data in the form of blocks. These blocks are arranged sequentially and are joined together via cryptographic verifications. Designing this blockchain technology has brought about a series of advantages to diverse manufacturing industries, increasing security, even in untrustworthy environments.
Nevertheless, the same way it has brought advantages, its decentralised nature has also brought some disadvantages. For example, Blockchains offers limited effectiveness and necessitates amplified storage size when likened to traditional centralised databases.
However, in this article, we will be discussing some of the advantages and disadvantages of Blockchain to businesses, manufacturing industries, etc.
ADVANTAGES OF BLOCKCHAIN
Blocks that are confirmed are not likely to be reversed. This simply means that it is not easy to remove or adjust once you register data into the Blockchain. This makes Blockchain a superior technology for keeping financial records or any other data where an audit track is necessary because every adjustment is traced and permanently inputted on a dispersed and public ledger.
For instance, let's take an industry that could use blockchain technology to avoid dishonest acts from its employees. In this type of situation, the Blockchain could offer a safe and steady record of all the financial transactions that take place within the company. This will make it extremely difficult for an employee to hide any suspicious transactions.
Blockchain data is mostly kept in numerous devices on a dispersed network of nodes; the system and the data are exceptionally not affected by technical failures and nasty occurrences. Every single network node can duplicate a copy of the database, and due to this, there is no particular point of failure. One specific node that goes offline does not affect the accessibility or security of the network.
However, contrary to this, many conventional databases depends on single or few servers and are more exposed to technical failures and cyber-attacks.
3. TRUSTLESS SYSTEM
Looking at most of the traditional payment systems, transactions are reliant on the parties involved and an intercessor such as banks, Credit Card Company, and so on. When using blockchain technology, this is no longer required since dispersed networks of nodes confirm the transactions through a MINING process. Hence, Blockchain is referred to as a "Trustless" system.
Thus, a blockchain system disproves the dangers of trusting a single organisation and, at the same time, decreases the total costs and transaction fees by laying off intercessors and third parties.
In terms of storage, Blockchain can develop in a tremendous way with time. Presently, this Bitcoin Blockchain needs about 200 GB of storage. The current development in the size of Blockchain seems to be exceeding the development in hard drives, and the network risks losing nodes if the ledger becomes too large for individuals to download and store.
2. PRIVATE KEYS
Blockchain mostly uses public key cryptography to grant users the right to their cryptocurrency units or any other blockchain data. Every single blockchain address possesses a conforming private key. Even though the address can be shared, the private key should still be kept secret. Every user needs their private keys to be able to gain access to their funds. This means that they can act as their bank. For instance, if a user loses his private key automatically, the funds will be lost, and there is no solution.
3. DATA MODIFICATION
This is another disadvantage of blockchain systems. It is difficult to modify data once it has been added to the Blockchain. Although stability is one of Blockchains advantages, it is still not always good. Deciding to modify blockchain data can be very challenging and often requires a hard fork, where one chain is abandoned, and a new one is taken up for use.
Blockchains are incredibly inefficient, particularly those making use of Proof of Work (POW). As mining is extremely competitive and there is just one winner for every ten minutes, every other miner's efforts are fruitless. While miners are persistently trying to increase their computational power to have a greater opportunity to discover a valid block hash, the properties used by the bitcoin network have risen meaningfully in the last few years. Presently, it has used up more energy than most countries, like Nigeria, Ireland, etc.
Regardless of the disadvantages above, blockchain technology still offers some exclusive advantages, and it is staying absolutely. We still have a long way to mainstream adoption; however, several industries are getting to grasp the advantages and disadvantages of blockchain systems. In the next few years, we may see businesses, industries and government trying out new applications to know the point at which blockchain technology adds value the most.