In this blockchain tutorial, we will discuss the pros and cons of blockchain. Also, we will cover these topics.
- What is Blockchain Technology
- What are the advantages of Blockchain
- What are the cons or disadvantages of Blockchain
What is Blockchain Technology
Blockchain is a decentralized technology that works on a peer-to-peer connection. This technology came into discussion with the arrival of Bitcoin in the year 2008.
This technology is proved to be a boon and bane for humans. In the further sections, we will discuss how this technology is being used for good and bad purposes.
Pros of Blockchain
In this section, we will learn what are the pros of blockchain technology.
1. Process Integrity
- WIth the help of blockchain, the whole transaction history is visible to the public, making it more open and transaparent.
- Blockchain is a variety of distributed ledger which makes the transaction histories more transparent.
- Instead of individual copies, all network members have access to the same documentation.
- This common version can only be updated with the help of consensus, when everyone must agree on the proposed change.
- Change of even a single transaction record would necessitate the modofication of all consecutive entries and network collusion..
The blockchain comprises blocks of information & these blocks can easily be tracked in case something went wrong add-on to this blockchain creates an irreversible audit trail.
Blockchain is a decentralized technology which means there is no centralized server where all the information is stored and each transaction is taking place.
Anyone can buy hardware and set up a mining rig that will perform as a node to the blockchain. There are various tutorials over the internet to set up the mining rig.
No hacker or attacker is aware of the exact location and number of these mining rigs. Which ultimately reduces the risk of attacks.
Aside from these considerations, blockchain is a very secure technology because each person who joins the Blockchain network is given a unique identifier3 that is tied to his account.
This ensures that the legitimate owner of the account himself/herself is operating the transactions.
The blockchain’s block encryption makes it more difficult for hackers to modify the chain’s traditional setup.
4. Comparatively Less Cost Per Transaction
Blockchain transactions do not involve any third-party intermediaries this saves lots of costs.
Cons of Blockchain
In this section, we will cover various cons of Blockchain technology.
1. Power Consumption
- Blockchain minning rigs consume huge amount of power.
- One of the factors behind this comsumption is that once a new node is created, it connects with all other nodes at the same time.
- While using torrent, you must have noticed that ‘uplink’ in torrent keeps on displaying some values even for the downloaded file. This means that it is acting like a server and helping other computers who are trying to download the same file. Same thing is followed in blockchain aswell.
- In 2021, bitcoin crashed because Tesla (One of the pppular electric car company in the United States of America) denied to accept bitcoin as a payment method. The reason Mr. Musk gave was as following: “mining of the coins used too much fossil fuel-generated electricity.”
- Blockchain technology is volatile in nature which means it keeps on changing rapidly.
- Bitcoin used blockchain technology and everyone is aware about the quick ups and downs take place in it.
- Blockchain technology is yet to be accepted by countries due to which any news can imapact it’s performance.
- When tesla stoped accepting bitcoin as payment then this simple tweet crashed the entire bitcoin market.
- So with this we can concluse that blockchain techology is volatile in nature.
3. Digital Signature Verification
- Digital Signatures are the key based verification that involve public and private keys to encrypt and decryt the signed file(s).
- Though it is secure, but if these keys accidently went into the wrong hands then there is no recovery for the account.
4. Uncertain regulatory status
- Blockchain is decentralised technology where as banking systems are based on centeralized technology.
- Due to which government of most of the countries don’t see it as a great option. Decentralised systems don’t give much control to the government as centeralised systems do.
- Purchase of weapons, drugs, organs, pets, and other illegal things can be done over the darkweb using blockchain technology. Which is a major concern of the government.
- Discussion on this is in process amoung the goverment of different countries. We wil update this blog once the concrete decision is inplace.
5. Major Security Flaw
- if more than 50% of the machines serving as network nodes are falsehood, then that false statement will automatically considered truth. This is stated as ‘51% attack’ and was highlighted by the creator of bitcoin Satoshi Nakamoto.
- As a result, the community actively monitors bitcoin mining pools to ensure that no one unwittingly obtains network dominance.
- A Netflix show ‘Silicon Valley‘ has shown the live example of 51% attack.
You may also like:
- Consensus in Blockchain
- Types Of Blockchain
- Methods of Decentralization in Blockchain
- Decentralized Applications in Blockchain – DApps
- Cryptography in Blockchain
- Blockchain Uses Other than Currencies
- Blockchain Uses Other than Currencies
In this tutorial, we have learned about the pros and cons of blockchain technology or the advantages and disadvantages of blockchain.
I am Bijay, a Microsoft MVP and founder of TSInfo Technologies, a SharePoint development company. Currently focusing on getting expertise on Ethereum, Solidity, Bitcoin, Cryptocurrency, Blockchain, etc. Sharing my expertise and tutorials on Bitcoin and Ethereum related technologies. Read More…