The advantages and disadvantages of blockchain technology
Blockchain is a digital ledger that records transactions which are made in bitcoin or other cryptocurrencies. First major Blockchain innovation was bitcoin, and was also considered to be a digital experiment. Despite its experimental origins, bitcoin is now used by millions. The market is large and is continuously growing. Just like the revolution of smartphone, blockchain is also referred to be a silent revolution. Present days, the businesses models may change completely in future due to powerful changes in blockchain.
The blockchain can provide a decentralized distributed database of all the records. With a decentralized database, everyone gets access to the records. The blocks which are added to blockchain can’t be tampered or changed because they are permanently added to the blockchain.
If some person wants to commit fraud by changing a transaction, he will have to change all the blocks before and after that block because each block refers to the previous block. After 06 blocks are added on top of network, it is not possible to change any transaction because computing power required would make it unfeasible. For example, if a transaction occurs in block number 7, once blockchain reaches block 13, it will be impossible to change transaction in bock number 7. The number of blocks that are added on top of transaction are commonly referred as confirmations. The companies wait for 06 confirmations before accepting payment to make sure that the transaction would not be changed.
Advantages of Blockchain Technology:
There are lot of advantages of blockchain technology. Many applications and games are built on blockchain network. Let’s briefly discuss the advantages of blockchain technology:
• The major benefit of blockchain is disintermediation. The two parties can conduct the transaction without involving third party. This speeds up the process.
• It allows the users to remain in control of all information. They can exercise same level of control over their transactions.
• Data is always synchronized in blockchain. The data is always complete and consistent on all nodes. Another major benefit is that data is always available.
• The nature of blockchain technology is decentralized. It means there is no central location. So it is not possible to hack a single node.
• Unlike traditional methods of transaction, blockchain contains protocols. The users can trust their transactions to be executed in exact manner specified by protocols.
• All the transactions are transparent and confidential. The users remain on top of all transactions that are taking place.
• One of the greatest benefit of blockchain technology is that its speeds up transaction. It can reduce the time of transaction to complete in just few minutes and these can be processed 24/7 without the need of working hours.
• Another great feature of blockchain is that it has reduced transaction costs as compared to conventional transaction methods.
The Disadvantages of Blockchain Technology:
It would not be correct to describe as following as disadvantages of this technology as there may be solutions to overcome these problems. However it will take time to solve them.
• It is a fact that blockchain technology is still in emerging stages and there are some issues like data limits and verification process which needed to be resolved.
• There is very little regulation for bitcoins and other coins. There are some financial institutions which stop the widespread use of this technology. Its regulation status must be defined.
• The mining of the bitcoin requires substantial amount of computing power and these powerful computers require lot of power without any downtime. Therefore energy consumption of this technology is very high.
• There are some issues of security and privacy in blockchain technology which needed to be addressed.
• Initial costs of adopting the blockchain technology are very high.
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