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 known to be a decentralized database as it operates as a dispersed digital ledger. It records data in the form of blocks. They are arranged sequentially and joined together via cryptographic verifications. Having designed 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 decentralized nature has also brought some disadvantages. For example, compared to traditional centralized databases, Blockchains offer restricted effectiveness and require amplified storage size.
Therefore, in this article, we will consider some of the pros and cons of Blockchain for business and more.
ADVANTAGES OF BLOCKCHAIN
Confirmed blocks are unlikely to be cancelled, which means that once the data gets registered in the Blockchain, it will not be easy to delete or configure it. It makes Blockchain a superior technology for storing financial records or any other data that needs auditing. So, every adjustment gets tracked and continuously entered into a closed and public ledger.
Let's take, for instance, an industry that could use Blockchain technology to avoid dishonest acts from its employees. In such a situation, Blockchain can offer a safe and stable record of all financial transactions in the company. Therefore, it will be challenging for an employee to hide suspicious transactions.
Since Blockchain data is mainly stored on multiple devices in a distributed network of nodes, the system and data are incredibly resistant to technical failures and unpleasant events. Every single network node can duplicate a copy of the database. Due to this, there is no particular point of failure. A specific node that goes offline does not affect the accessibility or security of the network.
However, contrary to this, many conventional databases depend on a single or few servers. Therefore, they are more exposed to technical failures and cyber-attacks.
3. TRUSTLESS SYSTEM
Traditional payment systems rely on the parties involved, such as banks, Credit Card companies, etc., when using Blockchain technology. However, this is no longer required because dispersed networks of nodes confirm the transactions through a process called MINING. Hence, Blockchain is known as a "Trustless" system.
Thus, a Blockchain system disproves the dangers of trusting a single organization and at the same time decreases the total costs and transaction fees by laying off intercessors and third parties.
DISADVANTAGES OF BLOCKCHAIN
In terms of storage, Blockchain can develop in a big way with time. Currently, this Blockchain requires approximately 200 GB of memory. The current development in the size of Blockchain seems to be exceeding the growth in hard drives. Thus, the network risks losing nodes if the ledger becomes too large for individuals to download and store.
2. PRIVATE KEYS
Blockchain uses public-key cryptography to grant users the right to crypto coin units or any other Blockchain data. Each Blockchain address has a matching private key. Even though the Blockchain address can get shared, the private key should still be kept secret. Each user needs their private keys to access their funds. The private key means that they can act as their bank. Suppose peradventure a user loses his private key, automatically. In that case, the funds will get lost, and there is no solution to that.
3. DATA MODIFICATION
Data Modification is another disadvantage of Blockchain systems. Once added to the Blockchain, it is difficult to change the data. Although stability is one of Blockchain's advantages, it is still not always good. Changing Blockchain data can be complex and often requires a hard fork where one chain gets dropped, and the new one gets retrieved for use.
Blockchains are incredibly inefficient, particularly those making use of Proof of Work (POW). As mining is highly competitive and there is just one winner for every ten minutes, this means that the efforts of every other miner are fruitless. However, miners are persistently trying to increase their computational power to have a more significant opportunity to discover a valid block hash. Still, the properties used by the Bitcoin network have risen significantly in the last few years. Presently, it has used up more energy than most countries, like Nigeria, Ireland, etc.
Despite the disadvantages mentioned above, Blockchain technology still offers unique advantages and remains unchanged. We still have a long way to mainstream adoption; nonetheless, several industries are getting to grasps the advantages and disadvantages of the Blockchain systems. In the next few years, we can see businesses, industries, and governments trying out new applications to know the point at which Blockchain technology adds value the most.