Blockchain technology is important in many industries because it helps make transactions safer and easier to understand. But it also has its problems. This article will talk about both- blockchain technology advantages and disadvantages.
Blockchain Technology Advantages
1. Enables Anonymous Transfers of Value
Using blockchain technologies, anything of value can be transferred from one person to another securely and anonymously. There is no possibility of illegal alteration of value during transportation.
This means that a global network of wallet-to-wallet transactions is possible using a peer-to-peer network that bypasses traditional banking structures.
2. Provide Access to your Funds 24 Hours a Day, 7 Days a Week
If you have fiat currencies deposited in a traditional bank account, your funds could be frozen, or even seized, during a period of economic uncertainty.
Although many people don’t believe that something like this will happen, in 2013, some people lost up to 40% of their deposits when banks in Cyprus confiscated the funds in their accounts.
Even in the US, investments are insured, not guaranteed, which means that some assets can be frozen and inaccessible. Blockchains eliminate this problem.
3. Eliminate the Need for an Intermediary
Because blockchains provide a verifiable transaction for a large global peer-to-peer network, the need for intermediaries is reduced.
This means that financial institutions, the credit card process, lawyers, governments and everyone else who wants to withdraw some of their money are limited in what they can actually access.
Although the value of transactions can vary enormously, more so than the value of fiat currencies, there is a history of more than 10 years of real value being attributed to blockchain transactions.
4. Allows Users to Have Full Control over their Information
Using a credit card means sharing personal data, which can be exposed in data breaches by retailers, risking security. Blockchains offer an advantage by allowing users to maintain control over their information for transactions, reducing risks.
5. Offers a Higher Level of Transparency
Blockchains are visible to the public. This means that there is a level of transparency available for transactions that cannot be found with other currency options.
These transactions are also immutable, meaning that once added to a blockchain, it cannot be removed or altered in any way.
6. Offers a Certain Level of Process Integrity
Blockchains maintain process integrity, ensuring transactions follow established protocols. Third-party involvement isn’t necessary since transaction completion relies on process integrity.
Monitoring the transaction completion process isn’t required when purchasing items via blockchains, as some transactions are irreversible.
7. Reduce Clutter
Blockchains are part of a single public ledger. There is no need to deal with different forms of accounting rules or multiple ledgers when using blockchains for transactions.
The whole process is simplified, making it easier to manage financial transactions, improving the speed of those transactions and even reducing overall transaction costs.
Blockchain Technology Disadvantages
1. It is Not a 100% Secure Technology
Hacks can and do occur with blockchain technologies. Although this system is more difficult to hack than other types of financial networks, the change in value associated with a security breach is quite large.
In June 2018, after a major hack on an exchange in South Korea, Bitcoin fell to a value of less than $7,000, putting it at a 7-month low. If you have money, it too can be stolen, but you have something tangible to protect. With blockchains, your assets are digital.
2. It’s Not a Technology Recognized for its International Value
Many governments don’t recognize the true value of cryptocurrencies or blockchains, despite their growing popularity. Retailers are slow to adopt the use of cryptocurrencies for transactions.
Bitcoin offers such slow transaction times, in fact, that it is not viable for a point-of-sale transaction. This makes it difficult for many to see cryptocurrencies as a valid payment option, making it difficult for blockchains to be valuable, either.
3. Offers Irreversible Transactions
Once a transaction is added to a block on the longest chain, it becomes irreversible, a fundamental feature enabling the functionality of blockchains and cryptocurrencies. Nevertheless, you can find out more about the best crypto films.
Custody services exist to safeguard transactions for both parties, yet this diminishes the benefit of intermediary-free transactions. For some, irreversible transactions may even be advantageous, depending on their intended use of the technology.
4. It can Offer Very Slow Transaction Times
When initiating a transaction through Bitcoin, the time it takes to complete the action can be more than 40 minutes. For this reason, some are looking for alternatives to cryptocurrency as a way of increasing the influence of blockchain technologies.
One option, NewYorkCoin, offers a similar structure to Bitcoin, but with transaction speeds 20 times faster.
5. Offers a High Cost of Access
This is another negative mainly associated with Bitcoin. In November 2017, the cost of completing a Bitcoin transaction was just $6. In December, it was over $26 per transaction. There were times when transaction costs exceeded $40 in 2018.
Although you can set the price of the transaction fee, a higher price is needed to attract miners to include transactions with the following blocks to avoid long waiting times.
6. Each Application is Required to be Verified Individually
Each blockchain transaction needs to be digitally signed using private cryptography to verify transactions between nodes. While this boosts security, it also slows down processing speeds due to bottlenecks in the blockchain process.
7. It has an Uncertain Regulatory Status
Blockchain technologies may have existed since 2008, although it wasn’t until 2016 that they really started to gain attention. This means that there is little government regulatory oversight in the world of cryptocurrencies and blockchains.
Due to the lack of regulation, financial institutions didn’t want to get attached to this technology in order to promote it. If something unexpected happens to one of your transactions, you may have few legal options available to recover your funds.
8. Requires a Large Amount of Energy
Running a blockchain is a resource-intensive way of managing resources. It is very capital intensive because there are dedicated hardware resources that must be used to be successful, especially if mining is involved.
Massive levels of electricity are also required, which can make mining Bitcoins or other cryptocurrencies unprofitable, especially in the short term.
Although there are success stories of people investing thousands of dollars in Bitcoin to recoup millions, the average person will see modest returns at best.
9. It offers a Variety of Languages
When developing a blockchain, there can be a lot of indecision when determining which language to use for the final product. Some blockchains have decided to use JavaScript, as many programmers are already familiar with this language.
However, from a development point of view, someone would need to master several programming languages to maximize the potential benefits that this technology offers.
10. It Offers a Virtually Unlimited Pool of Cryptocurrencies
Bitcoin may be the most popular cryptocurrency, although that’s probably because it was the first. At current count (as of June 2018), there are more than 1,600 cryptocurrencies, tokens and coins available for trade and transactions at the moment.
Companies are starting to create their own coins as a way of simplifying transactions. Although blockchains have the unique ability to become a global currency, there are actually more currencies available through this technology than through traditional government-backed currencies.
Conclusion of Pros and Cons of Blockchain Technology
The blockchain technology advantages and disadvantages provide us with a fundamental technology that can be used as the future of monetary transactions worldwide.
As a global monetary base based on supply and demand values, it could create many new opportunities for the developed world to help the developing world progress.
There are challenges to be faced with this technology and negatives to manage, but in general, blockchains create more security.
F.A.Q
What is Blockchain❓
Blockchain is a digital ledger where transactions are recorded in a secure and transparent way.
How Does Blockchain Work❓
Blockchain works by recording transactions in blocks that are linked together in a chain. Each block contains a unique code and information about the transaction.
Is Blockchain Secure❓
✅ Yes, blockchain is secure because each transaction is encrypted and linked to the previous one, making it difficult to alter without detection.
Can Blockchain be Hacked❓
While hacking a blockchain is theoretically possible, it’s extremely difficult due to its decentralized and encrypted nature.
What are Blockchain Technology Benefits❓
Blockchain offers benefits such as increased transparency, reduced transaction costs, and enhanced security.
Is Blockchain Only for Cryptocurrency❓
While blockchain is commonly associated with cryptocurrency, it has applications beyond finance, including supply chain management and healthcare.
Blockchain Transactions be Reversed❓
❌ No, once a transaction is recorded on the blockchain, it cannot be reversed or altered.
Do I Need Special Knowledge to Use Blockchain❓
While understanding blockchain basics can be helpful, many blockchain applications are designed to be user-friendly for individuals without technical expertise.
