Many blockchain enthusiasts are claiming that blockchain technology is the next great digital revolution. They aren’t wrong, to be honest. Technology can change the way we live, eliminate middlemen and open up new possibilities. However, many people don’t weigh the pros and cons of blockchain before jumping in.
Every technology has its advantages and disadvantages. Blockchain is no exception. When enterprises attempt to harness blockchain’s full potential they often overlook the problems.
Many people make mistakes, lose resources and waste their time as a result. This guide will help you weigh the pros & cons of blockchain. Let’s now look at the pros and cons of blockchain technology. Before we get into the pros and cons of blockchain technology, let’s first briefly recap what blockchain technology is.
What is Blockchain Technology?
Let’s get down to the basics: Blockchain technology is a distributed ledger system that encourages transparency, data integrity and distributed nature.
It’s basically a ledger system with blocks and each block connected in a chain-like arrangement. All blocks will be connected to each new block.
Each block will also contain information. The chain-like structure represents the linking process. All information in a block is encrypted. It will also include a hash ID and timestamps as well as transactional data.
This type of architecture will result in a chain of blocks. This is how the blockchain name was created. It is easy to confuse blockchain with database. However, the reality is that blockchain and database are quite different.
Blockchain’s greatest advantages are its peer-to-peer connectivity. There won’t be any central server watching your every move.
Blockchain technology has many pros and cons. We’ll be focusing on the pros first. Below are the pros and cons of blockchain technology.
Advantages Of Blockchain Technology
Blockchain technology has many benefits. Let’s take a look at some of the benefits.
First, blockchain is a distributed system. This means it eliminates all middlemen from your system. How is this an advantage? In reality, middlemen are the third-party source that connects your services to you.
In the business world, middlemen get a cut for every service they offer. Although a small payment may not seem like much to you, it can add up if your service is complex and requires more than 10 steps.
It is impossible to know if the intermediaries will be honest about their services. In reality, corruption is widespread and many intermediaries abuse consumers and enterprises for their own gain.
The trust problem can be solved by getting rid of them. Let’s now look at the next benefit of this blockchain guide.
Blockchain technology provides a higher level of data quality. It is actually a distributed ledger system that stores data. How does it deliver high-quality data? You need to understand that low-quality data will not instantly convert into high-quality data. This is not the way it works.
This distributed ledger technology allows you to replace any unusable data with good data. This means that anyone can add or modify any type of information to the ledger.
It will eliminate false data if every piece of information has been verified before being added to the ledger.
It also eliminates human-made mistakes. Every piece of information has been verified and there is no room for human-made errors.
It significantly improves the data quality. Let’s now move on to the next benefit in this guide to blockchain pros and cons.
No One Can Alter The Blocks
Blockchain is the best in durability. It could be compared to the internet with its built-in resilience. The technology’s overall structure makes it durable. It also stores information in blocks throughout the network so that it is immune to any one entity or point of failure.
This makes the system durable. It is also secure because no one can alter it. It is also quite effective in resisting hacking attempts.
This means that there is little to no chance of the network being overpowered.
It Is Reliable
Data reliability and long-term longevity are another great benefits of blockchain. Blockchain is transparent, immutable, and offers integrity. These characteristics are what make blockchain technology reliable and long-lasting.
It is also indestructible because no one can change the rules of blockchain. It is a reliable technology because it offers viable solutions to various business problems over the long-term.
Many companies are considering implementing blockchain technology in their legacy networks in the long-term.
Users Have Control Over Teir Data
Users don’t have much control over their own data in a traditional centralized system. Multiple corrupt individuals attempt to use the information to their own advantage.
Blockchain ensures that users have access to their information peer-to-peer and allows them to retain control. This makes it impossible for anyone to misuse it. This transparency and level of security ensure that each individual has complete control over their data.
This is something we’ve longed for a long time.
Process Of Transaction Is Fast
It allows for faster transactions than traditional methods. The processing of transactions can be slow at centralized banks. This becomes more important when someone attempts to send money abroad.
It could take as long as six days to process the transaction. In times of emergency, consumers shouldn’t have to rely on slow-paced banks’ systems. Blockchain allows you to complete transactions in a matter of seconds.
Disadvantages Of Blockchain Technology
We’ll now discuss the cons of blockchain technology.
This technology’s computation requirements are much more repetitive than those of centralized servers. This is because all nodes must update their versions of the ledger every time it is updated.
Because of the distributed nature of the ledger systems, each node must have a copy. It must go through the same process repeatedly.
Signature Verification Process Is Not User Friendly
You will need to verify the private-public cryptographic signature for each transaction. The ECDSA (Elliptic Curve Digital Signature Algorithm), is then used to verify that the transaction takes place between the correct nodes. Each node must verify the authenticity, which can be complicated and difficult.
All Users Don’t Have An Access To Private Key
You will need a private key to transact on the network. Although other users may see your public key, a secret private key is more important because it cannot be seen by others. All blockchain addresses will also have a private key.
If you don’t wish for others to misuse your assets, it is important to keep your private keys secure. If you lose your private keys, you will lose access to the funds on your network. They are not recoverable.
The Technology Is Still A New Concept
Technology is still a new concept and there aren’t many developers who can do it. It is difficult for enterprises to find a team capable of developing their own enterprise blockchain solution.
This is where BAAS providers can offer many services. These services provide high-end marketing and development teams to help you get your Blockchain solution on the marketplace.
Integration Process Is Not Fully Functional Yet
This is a major disadvantage for legacy network operators. Blockchain would in fact replace legacy networks. The integration process is not yet fully functional. Many blockchain technologies are not compatible with legacy networks, making it even more difficult.
This means that companies will need to completely eliminate their legacy networks in order to make use of it. Many are skeptical about this.
Not all blockchain technologies have the right set of regulations. Many people don’t trust this system. The other side is the idea of ICO scams.
Many have been victims of ICO scams, as there is no regulation regarding cryptocurrencies. It is also difficult for government institutions to adopt it, as the sector is fully regulated.
To maintain their brand value, enterprises need to protect their data. They cannot reveal sensitive information to the general public or to their competitors, obviously.
Many organizations are not keen to use Blockchain for business purposes. This problem is being solved slowly by the use of private transactions options and user-specific authentication.
This is more of an architectural disadvantage than a technical one. Our business models have been operating on this architecture for a long time. However, the invention of blockchain could threaten this system.
Blockchain has already disrupted many industries and changed the way that the system works. Multiple marketplaces are now obsolete.
It Can Be An Expensive Solution
Blockchain is cheaper than other infrastructures. However, it can also be expensive. The cost of a feature depends on the type and needs you have. A solution form of starch is expensive and requires significant investment.
It is also worth noting that replacing the legacy system could be expensive. This issue can be overcome if your solutions are minimal. You can also join a consortium or use a BAAS to help you. Blockchain as a service can assist you in creating a solid business strategy.
Blockchain technology is still a new technology and has a long road ahead.
You should also note that blockchain has already solved most of these issues and is working on a better way to reduce them as much as possible.
In the future, you may see the perfect technology that can disrupt industries. This is an excellent opportunity to learn more about blockchain technology.