Blockchain is an indestructible ledger that records economic transactions and can be designed to keep track of financial transactions and anything that holds value.
It’s a decentralized ledger that’s not governed by any third parties or financial institutions. It not only provides a secure and safe way of transactions and trading, but it is also one of the fastest ways to get things done without interruption from intermediaries. Cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin use blockchain technology to provide the best user experience. If you invest in cryptocurrency and buy Bitcoin Cash to trade, you will get the best of blockchain technology.
However, there is no such thing as a perfect or faultless technology, and the same is true with Blockchain development. Here, in this article, we will look at some of blockchain technology’s benefits and drawbacks.
Advantages of Blockchain Technology:
- Integrity and Security:
Blockchain technology was created to get rid of the inefficient centralized technology on which banks and government organizations run. Each block in the blockchain stores data in such a way that it cannot be modified or edited. Hence, once a transaction is made, it cannot be altered by any means. This makes blockchain reliable and adds a tight layer of security.
The most promising feature of blockchain technology is that it quickly identifies and resolves mistakes that unknowingly occur during a transaction. A permanent audit trail is also marked on the transactions.
- No Third-Party Interruption:
Blockchain technology provides a very safe and secure connection in a distributed network which means peer-to-peer connection. There are no middlemen in your network, so your transactions are free of hack, corruption, and third-party authority. Your identity and funds are free from intermediaries that abuse enterprises for personal gain.
This decentralized nature of blockchain technology makes it one of the most promising revolutions in the finance, tech and business sectors. Blockchain technology is not limited to finance, and it is quite a stir in fields such as photography, music, entertainment, food, and much more.
- Fast Processing:
It used to take a lot of time to process transactions. If your transaction is across the border, it could even take days. With the introduction of the blockchain, transaction speed rose dramatically. Previously, the entire centralized banking procedure could take up to two-three days to complete, but with the arrival of Blockchain technology, the time was cut to minutes, if not seconds.
Because each user who joins the Blockchain network is given a unique identity tied to his account. Blockchain technology is extremely safe. This assures that the account owner is the one conducting the transactions. The block encryption in the chain makes it more difficult for a hacker to disrupt the chain’s typical configuration.
- Transparent Nature:
Blockchain is an immutable data storage format that prohibits any data from being changed or deleted.
In reality, cryptographic hashing is essential for maintaining an immutable structure. Because every block will have a Hash ID, any changes to the contents of that block will cause the ID to change drastically. It’s also impossible to have two Hash IDs.
As a result, if someone attempts to alter the data, it will be visible to all other users right away. In any event, the public has access to the bulk of the ledger system based on this technology. Even with private blockchains, common ledger data is accessible at any moment by everyone.
Disadvantages of Blockchain Technology:
- High use of Energy Resources:
Blockchain technology consumes a lot of electricity and power. In one year, the power consumption of Bitcoin miners was higher than the per capita power consumption of 159 different nations. One of the reasons for this usage is that every time a new node is created, it connects with every other node simultaneously.
According to recent surveys, on average, Bitcoin transactions cost almost $75-$160, with the majority of this cost being the usage of energy and power.
There are relatively few odds that technological advancements would be able to fix this problem. The storage problem, on the other hand, may be encompassed by the energy difficulties, which cannot be resolved.
The central government has established and controls fiat money such as USD, EUR in every country on the planet. Bitcoin and blockchain technology acceptance by current financial institutions is still a stumbling block.
Since there are mostly no regulations connected with blockchain technology, people don’t seem to trust this technology. Lack of regulations also manifests hacks and thefts.
Blockchain is still a new technology that has a long way to go. As a result, it’s almost certain that it will have both disadvantages and advantages. In this article, we’ve covered most of the benefits and drawbacks of blockchain.
However, you should be aware that blockchain has already handled most of the difficulties and is working on finding a newer approach to reduce the concerns to the greatest extent feasible.