The anonymous developer of bitcoin was the same creator who first used blockchain technology to assist in cryptocurrency documentation more than a decade ago.
From then on, blockchain technology became a digital revolution and still unfolding across different areas of society.
However, many people tried using the technology without balancing the pros and cons of blockchain and analyzing its true potential.
Let us first define and understand the technology before checking out blockchain pros and cons and why many use it today.
- What Is Blockchain Technology?
- What Are the Advantages and Disadvantages of Blockchain?
- Blockchain Revolution Summary
- What Is Blinklist?
- Pros and Cons of Blockchain: The Conclusion
What Is Blockchain Technology?
Blockchain technology is a science that tracks assets and stores transactions, keeping a shareable but unchangeable digital ledger of records stored in the clouds.
As its name implies, the digital ledger’s information comes in blocks with a chain-like connection; hence, the term blockchain.
Aside from the cryptographic security on each block of information, it also comes with other transactional data, timestamps, and has IDs.
Sounds great? It does, but there are still blockchain pros and cons for us to check as we go along.
Why Is Blockchain Important?
Blockchain is an essential aspect of every business. It can deliver accurate information quickly to a blockchain network, allowing authorized members to view it in complete transparency.
A business utilizing a blockchain network can easily keep track of accounts, orders, payments, production, and other business information.
It’s an efficient way for your company to monitor all transaction details from start to end, providing you the confidence that everything is properly documented.
What Are the Key Principles of Blockchain Technology?
Blockchain technology has four essential principles worth discussing since they make the system one of the most stable platforms today.
- Distributed Databases
Blockchain technology does not require a central server or third-party to facilitate and complete a transaction faster. Network users communicate and do business directly without an intermediary.
- Security and Immutability
Blockchain networks make security and harmony their priority applied in different ways while using a general formula. You cannot change or remove the recorded data.
- Transaction Speed
The blockchain platform’s decentralized design allows faster processing of your transactions in real-time without waiting for a third-party approval.
Blockchain technology comes with built-in protection against fraud, verifying any transaction because it cannot reverse the data.
What Are the Advantages and Disadvantages of Blockchain?
Blockchain technology may have started with cryptocurrency, but it’s now incorporated in small businesses’ data systems.
Like any other technology, blockchain also comes with advantages and disadvantages. It can chronologically save data, making it more organized.
However, blockchain is a decentralized database which means that its distribution is more scattered.
Let’s take a look at the pros and cons of blockchain in detail to get a more comprehensive understanding of how it works.
The good things about blockchain technology are:
- Distributed System
Blockchain information is kept in a distributed network on numerous devices, protecting it against cyberattacks and technical failures.
Each distributed network can copy and store the data, keeping it secured and available to the user anytime without third-party participation. Thus calling it
Blockchain technology helps secure all sensitive information by eliminating third-party servers that act as middlemen, removing cyber threats.
- Data and System Stability
Blockchain technology provides a stable and secured record of information inside a confirmed block that cannot be changed or modified.
Therefore, it’s perfect for permanently storing sensitive information and financial records on a distributed ledger.
The system filters and verifies all data input eliminating human errors or intentional adding of information.
- Empowered User
Blockchain’s peer-to-peer network, top-notch security, and transparency give users control over the stored information.
Only those with the necessary credentials can access the file. They can only check and view the data, but they can’t alter or delete it.
- Excellent Traceability
Keeping track of your products from the production up to their purchase is well-documented and easily traceable for quality control and auditing purposes.
- High Integrity Level
All the stored information in the ledger is reliably accurate, and no one can change the data once it’s added to the system.
- Longevity and Reliability
Blockchain’s system design keeps the data intact and saved in the system for a long time. You can access and view it anytime.
No one can change or delete the data, making it a reliable system to use in any business.
- New Business Perspective
Blockchain technology allows you to view business management from a new perspective. It offers a better infrastructure, eliminating old business practices while providing better solutions.
- Transparency and Immutability
Blockchain technology has an unchangeable storage system. No one can modify or even delete the information once added to the ledger.
Cryptographic hashing is responsible for maintaining the unchangeable structure of the blockchain. Each block hash ID is unique and cannot be replicated.
Most public ledgers in the blockchain network are visible to anyone who wishes to view them. Even a private blockchain network has common ledger data available for everyone’s viewing.
- Trustless System
The conventional payment system involves multiple parties to complete the transaction. This process completely changed with blockchain technology as it uses the mining process.
The method verifies the transaction as it is added to the blockchain ledger; thus, calling it the trustless system.
Payments made with blockchain technology eliminates the risk of entrusting your sensitive details to multiple parties and be susceptible to cyber frauds or attacks.
It also lowers the overall transaction costs since the system does not use third parties that charge their services fees.
These are just some blockchain advantages when utilizing the technology in your business system.
We’ll try to identify blockchain disadvantages to understand better why others are not using it yet.
- 51% Attacks
The formula protecting Bitcoin, called Proof of Work, proved to be efficient and effective. However, they found some possible attacks that can penetrate the blockchain network.
One of the most talked-about is the 51 percent attack. An attack is possible if one party can control at least 50 percent of the system’s hashing power.
Once they have control, they can breach the formula by messing up with the system’s order transactions.
Luckily, the 51 percent attack is only a theory for now. There was no report of such an incident happening to date.
Developers ensure that the system’s security increases as the network expands. In case an attack happens, they can only disrupt the latest transactions.
The link in each block has cryptographic proofs that can quickly respond to a malicious attack.
- Data Modification
It’s hard to modify or reverse any information added to the system because of its effective algorithm.
There are some rare instances where you need to change a saved data, but it may prove challenging and demanding.
You may need to use a “hard fork” to alter the saved data. It’s a backward-incompatible update for software that will allow you to do the change.
- Inefficient System
Even though blockchain technology provides many advantages, it still comes with some inefficiency, especially those utilizing Proof of Work.
Users, also called miners, have to compete for a valid block hash since only one gets to access it every few minutes.
When this happens, other miners’ work is disregarded and wasted. They have to improve their computational ability for them to find a valid block hash.
- Integration Issues
Integrating the legacy network and the new blockchain technology is not fully functional yet and is still under the development stage.
Presently, enterprises that want to use blockchain technology for their businesses need to discard their legacy networks completely.
- Limited Developers
Blockchain technology is still a new concept, making it hard to find developers who can handle and maintain your business system.
- Private Keys
Blockchain technology utilizes asymmetric or public-key cryptography, providing you complete control over your blockchain data.
Each blockchain has a shareable address, and each user must have their private key to access it.
Losing your private key means losing access to your data because you cannot replicate your access credential.
- Privacy Concerns
All business types are heavy on privacy matters concerning their products and processes. Blockchain technology is a shareable digital ledger that can expose your business information.
- Redundant Process
Every time you add new information, the ledger refreshes as the nodes are updated with the latest data.
- Storage Requirement
Blockchain public ledgers rapidly increase over time due to the overflow of data requiring a larger hard drive space.
A blockchain network can lose essential nodes if it becomes too large for someone to download.
- Uncertain Regulations
Some blockchain technologies don’t have the necessary set of regulations to operate, bringing about doubts and skepticism.
Blockchain Revolution Summary
Blockchain Revolution, written by the father and son tandem Don Tapscott and Alex Tapscott, talks about this new technology that can change how we do business and handle our finances.
The book is the first fundamental publication that talks about blockchain technology. It sheds light on how to utilize the system fully and more.
Blockchain technology promotes peer-to-peer transactions, eliminating the middle person as it promises a more secured activity.
The system verifies and stores a public record of every transaction permanently while maintaining the user’s details anonymous.
The blockchain system will keep the user’s identity and other sensitive information private and secure.
Alternatively, all activities are stored in public digital ledgers through incorruptible codes.
It’s a tamper-proof technology that allows cheaper and faster transactions while reducing corruption and enhancing contracts.
Depending on an enterprise’s requirements, blockchain can apply privacy or transparency accordingly.
The book not only discusses the impact blockchain can make in our everyday lives. It also tackles the possible dangers that we might encounter along the way.
Blockchain may sound too-good-to-be-true hence the need to educate the people about the technology and its benefits.
What Is Blinklist?
Understanding blockchain technology and how it can affect our future may take some time. This discussion is not enough to fully comprehend the process.
The book-summary platform Blinklist offers additional readings about technology and other topics that you might be interested in.
Check out our comprehensive explanation about Blinklist and the types of services it offers so you can start your free seven-day trial.
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Pros and Cons of Blockchain: The Conclusion
Enterprises must check the pros and cons of blockchain listed here and use it as a guide before implementing it into their businesses.
The system may not be perfect, but developers are continually working on the solution for its downsides.