Major blockchain projects are also rapidly developing and expanding, and the future application scenarios are also very broad. However, it also has many limitations and some shortcomings at the moment, and it faces problems that need to be solved.
The Advantages and Disadvantages of Blockchain Technology
Blockchain has a lot of core technologies, and it has brought a lot of new vitality to the fields of finance, logistics, and public welfare. But this emerging technology is also a double-edged sword and should be viewed from two perspectives. Let’s see the benefits and disadvantages of using blockchain technology.
Blockchain Technology Overview
Blockchain is based on distributed ledger technology. In a peer-to-peer network, everyone who generates these ledgers can view the same information in each block.
In a digital network, transactions recorded on a computer or a node can be seen by all other computers. In other words, everyone can see the same data. In addition, they can reject or verify what they see. And this information will then be transmitted to all other blocks in the blockchain.
This is also the reason why blockchain technology is difficult to be attacked by hackers. No single computer can control data alone.
To change the data in a block, the entire chain needs to be changed accordingly. Everyone has an automatically updated copy; any changes need to be verified by everyone in the network.
Moreover, with the introduction of Ethereum: a Programmable Blockchain (first proposed by a Russian-Canadian programmer – Vitalik Buterin – Ethereum Co-founder), blockchain technology can be used to create “smart contracts” that execute agreements when certain conditions are met.
Smart contracts are self-enforceable treaties based on blockchain technology; once the conditions are met, actions or payments can be automatically triggered.
In the near future, smart contracts will be able to use real-time information such as asset GPS data to trigger events, such as transfer of ownership and funds.
Blockchain technology can be used as a trusted platform to validate ownership of intellectual property works. Blockchain is one such technology that can fulfill the need of the system by providing security and proof of ownership towards intellectual assets.
What are the Advantages and Disadvantages of Blockchain?
With the ups and downs of cryptocurrencies worldwide, all walks of life are paying more and more attention to blockchain.
On the one hand, it is expected that the blockchain will bring surprises to various industries and even the entire human society. On the other hand, it is also concerned about this new technology. There are some concerns about whether the current and future multiple problems can be truly solved.
Everything has two sides, and blockchain is no exception. There are incomparable advantages and shortcomings that need to be improved. Here, we will take a look at the advantages and disadvantages of blockchain technology.
Advantages of Blockchain Technology
The basic advantages of Blockchain are decentralization, transparency, autonomy, immutability, openness, traceability, and security. Let’s see the benefits of using blockchain technology!
The public blockchain system is open and is jointly maintained by all nodes with maintenance functions.
In addition to the encryption of the private information of the parties in the transaction, anyone can query the blockchain data and develop related applications through the public interface. Therefore, The entire system information is highly transparent.
All participants can view the information in the blockchain, but cannot modify the information. This helps reduce risk and fraud while building trust.
The blockchain has the characteristics of decentralization. When storing data, it uses distributed records and accounting. It uses peer-to-peer technology and does not have a high degree of centralization. And there is no particular managing body. All nodes on the chain are equal, and if a node has a problem, it will not affect the operation of the entire database.
Blockchain lacks centralized points of vulnerability and failure that can be exploited by hackers and provides better resistance to malicious actors and external attacks.
The blockchain has decentralized and distributed and encrypted characteristics.
Each node in the system participates in the record of data changes at the same time. Each node keeps an identical and complete ledger.
The destruction of a single node will not affect the integrity of the entire ledger and record.
Due to these characteristics, the blockchain is difficult to be attacked illegally.
Therefore, this technology can greatly improve data security and guarantee the security of business and the Internet of Things (IoT).
Although information needs to be verified through a consensus process before being added to the blockchain, the data itself is converted into a series of letters and numbers through a hash code. It is mathematically impossible for a user to guess another user’s private key from their own public key.
Participants in the network cannot decipher this information without the key. This provides an increase in security and protects users from hackers.
Blockchain is a fundamentally tamper-proof ledger. Once the information has been verified and added to the blockchain, it will be stored permanently, and data records that are marked in chronological order and difficult to tamper with are generated, which can not only ensure the traceability of data but also greatly reduce the data fraud at different points in time.
Blockchain systems allow users to control their data through private and public keys, allowing them to own it.
Since blockchain data cannot be tampered with, it is very suitable for tracking and tracing the source of items in a complex supply chain.
Blockchain is a peer-to-peer network in the true sense and it adopts consensus-based specifications and protocols (such as a set of established algorithms), enabling all participants to conduct free and secure transactions in an environment that does not need to trust anyone.
The trust of “algorithms” eliminates human interference factors to achieve a high degree of autonomy. This will reduce the company’s reliance on certain third-party middlemen.
Through programming, blockchain technology can automatically trigger actions, events, and payments when conditions are met.
This helps to improve process efficiency, reduce the chance of data input errors and transaction costs.
Blockchain has the potential to transform the financial landscape. Blockchain technology can improve the efficiency and quality of data, protect information from data breaches and save on time-consuming administrative work.
Blockchain can accelerate process execution speed in multi-party transaction scenarios without being restricted by business hours and speed up transaction processing.
The transaction speed is one of the primary parameters by which blockchain scalability is measured.
A distributed ledger will help companies create a streamlined, more efficient and profitable process, allowing them to quickly obtain a return on investment.
Disadvantages of Blockchain Technology
Like all new technologies, blockchain also poses some challenges for suppliers and customers. So what are the main issues related to the blockchain? let’s see!
Data privacy issues:
The blockchain is distributed ledger. On the public chain, everyone has a complete account book. And because the blockchain calculates the balance, verifies the validity of the transaction, etc., each account needs to be traced, so the transaction data is Open and transparent, if I know someone’s account, I can know all his wealth and every transaction, there is no privacy at all.
The native blockchain technology does not have the ability to protect privacy. On the public blockchain, each participant can have a complete data backup. All transaction data is open and transparent.
If you know the account of a certain participant, it is easy to obtain it. The record of each transaction and the inference of the number of properties it owns is not conducive to the protection of personal privacy.
It is also said that a hacker who intends to corrupt blockchain systems will need computing power greater than at least half of the nodes in the blockchain. However, once additional coding complexity is added to satisfy subsequent specific requirements, this can lead to vulnerabilities in the blockchain and thus reduce the effectiveness of ledger security.
Cannot be tampered with or revoked:
Immutability and revocation are both the advantages and the disadvantages of blockchain. A major feature of blockchain technology is that it is irreversible and unforgeable, once a transaction is initiated, it cannot be revoked, if the transfer address is filled in incorrectly, it will directly cause permanent loss and cannot be revoked; the same is true if the private key is lost, no operations can be performed on the account. Unlike in real life, in some cases, the bank card can be withdrawn if the transfer is wrong, and if the bank card is lost, it can be reported and reissued and your money is still there.
Low transaction efficiency:
Compared with many Internet payment networks, the transaction efficiency of blockchain is still very low. From the perspective of transaction processing frequency, blockchain technology is far inferior to the Internet.
Breaking through the number of transactions per second is also one of the major technical challenges facing blockchain technology.
Delay in transaction confirmation:
There is a delay in transaction confirmation in the blockchain. Taking Bitcoin as an example, the confirmation time for each Bitcoin transaction is about 10 minutes, and it takes an hour for 6 confirmations. While the transaction efficiency of other digital currency systems has improved.
The validity of the current transaction is affected by network transmission because most nodes on the network will know the transaction and it will have to wait until the next accounting cycle, which means that the transaction must be approved by most nodes. It is also affected by a small probability event, i.e., when two or more nodes on the network compete for the accounting power at the same time, then two or more blockchain branches will be generated in the network. At this time, which branch records the data If it is valid, you have to wait for the next billing cycle, which is ultimately determined by the longest blockchain branch. Therefore, the transaction data of the blockchain is delayed.
Everyone has a complete ledger and sometimes needs to trace each record. Therefore, as time goes by, when the transaction data is very large, there will be performance problems, such as downloading the history for the first time. All transaction records can work properly. In order to verify that you really have enough money, you need to trace back each transaction in history to calculate the balance. Although some technical means (such as indexing) can be used to alleviate the performance problem, the problem is still obvious.
High energy consumption problem:
Blockchain is a high-energy-consuming system. In order to maintain the authenticity and integrity of the blockchain, its computing capacity has reached seven trillion operations per second.
Miners compete for the accounting rights of Bitcoin through random hash operations. This process requires power consumption to complete, and less than 1% of miners can compete for the accounting rights of blocks every 10 minutes.
The decentralized and autonomous characteristics of the blockchain have played down the concept of national supervision, but all innovations need to meet regulatory requirements. The supervision of blockchain can accelerate the application of blockchain to a certain extent and ensure the sound development of blockchain technology.
Blockchain has the potential to cross jurisdictional boundaries as the nodes in a blockchain network can be located anywhere in the world. This can pose many complex judicial issues that require careful consideration with regard to the relevant contractual relationships.
Finally, if blockchain technology wants to achieve a larger scale of landing applications, it must take into account specific application scenarios. Complete decentralization is not realistic in many scenarios. A transitional landing plan can be adopted. Under the background of gradual maturity of the scene, a greater degree of “decentralization” is gradually realized.
As an innovative technology, blockchain has very broad opportunities for future development. In the process of implementing the blockchain, it is imperative to make full use of new ideas and methods to give full play to their advantages and overcome their shortcomings and challenges, in order to maximize the value of the blockchain and promote the cooperative advancement of the blockchain, for various industries and even the entire human community.