This article explored all the disadvantages and advantages of blockchain technology. Blockchain technology has been positioned as a game-changing innovation that primarily provides security levels never previously seen. This makes it a remarkably adaptable technology, required and wanted by the IT or financial industries and all industries. Rather than cryptocurrencies, there are several blockchain use cases, such as blockchain gaming.
Before we get started, here is a list of the best blockchain books in 2022 for better understanding. You may have heard about the blockchain talent gap and started to ask what is a blockchain developer. But unfortunately, you find some blockchain implementation challenges and security vulnerabilities. However, the advantages of blockchain are worth dealing with them. Let’s dive in.
Advantages of blockchain technology
Blockchain technology is advancing quickly, and this trend is not about to stop. In the last few decades, many things that looked impossible—like high transaction costs, double spending, net fraud, recovering lost data, etc.—turned out to be true. However, all of this can be avoided with the development of blockchain technology. According to Statista, the most common use case for blockchain technology is securing information exchange.
These are some of the best advantages of blockchain technology:
- Cost reduction
- Free from censorship
- Faster processing
Anyone who decides to use and grasp blockchain technology will find it revolutionary. So let’s talk about the advantages of blockchain:
Blockchain technology makes transaction histories more transparent than ever. Each node in the network has a copy of the documentation because it is a particular form of a distributed ledger. Everyone may view the data on a blockchain ledger with ease.
Everyone in the network can notice the change and the updated record if a transaction history is changed. Therefore, everyone has access to all the information regarding currency exchange.
Compared to previous platforms or record-keeping systems, blockchain technology employs superior security. The consensus approach must be used to agree on all recorded transactions. Additionally, using a hashing algorithm, each transaction is encrypted and properly linked to the previous transaction.
Each node has a copy of every transaction made on the network, further improving security. As a result, other nodes will refuse his request to write transactions to the network, meaning that if a malicious actor ever wants to modify the transaction, they will be unable to do so.
Blockchain significantly reduces business costs because it eliminates the need for intermediaries and third parties. You don’t require anyone else to create the terms and conditions of exchange because you may put your trust in the trading partner. Allowing everyone to read a single, immutable version of the ledger reduces the time and money spent on documentation and its changes.
Free from censorship
The concept of trustworthy nodes for validation and consensus procedures that authorize transactions using smart contracts makes blockchain technology free from censorship since it is not under the authority of any one party.
It takes a lot of labor to complete a transaction using conventional paper-based systems since they require third parties to mediate and are prone to human mistakes.
Blockchain can speed up and discipline these antiquated processes, minimize error-proneness, and increase trading’s efficiency. Parties don’t need to maintain various records because there is only one ledger, which results in significantly less clutter.
Additionally, building trust is simpler when everyone has access to the same information. Settlements can be made simple and easy without the need for middlemen.
The transaction speed rose significantly once the blockchain technology was developed compared to how long it took the traditional banking organization to process and started the transaction.
Before the advent of blockchain, the banking process took about three days to settle. However, after its implementation, the time decreased to only a few minutes or even seconds.
Tracking things back to their sources in complex supply chains is challenging. However, with blockchain, the trades of items are tracked, giving you an audit trail to determine where a specific object was acquired.
Additionally, you learn about every stop the product made along the way. This level of product tracking can assist customers in confirming the product’s legitimacy and stopping fraud.
The above-mentioned point’s auditability also has another component. You can already observe and verify the legitimacy of your asset thanks to the audit trail that exists because each transaction is logged in the blockchain for the entirety of its lifetime.
Advantages of blockchain technology by sectors
The use of blockchain technology has various benefits. The first advantages are that it is secure, open, and difficult to manipulate. It enables widespread distribution and access to digital information without allowing for editing, making it a remarkably trustworthy source of first-hand information. It also enables the existence and trading of cryptocurrencies like Bitcoin.
Check out the best enterprise blockchain examples
Let’s take deep dive into the advantages of blockchain technology by sector.
Advantages of blockchain in accounting
How does blockchain benefit an accountant today? These are the advantages of blockchain in accounting:
- Rarer fraudulent actions
- Gain time for accountants
- Secure the data
- Give opportunity for upskilling
- Knock-on effect to business models
- Attract new customers
Advantages of blockchain in healthcare
What advantages does blockchain have for healthcare today? The benefits of blockchain in healthcare are as follows:
- Patient profile privacy
- Drug traceability
- Improved clinical trials
- Electronic health records (EHRs)
Advantages of blockchain in the energy sector
What benefits does blockchain technology now provide for the energy sector? The following are some advantages of blockchain in the energy sector:
- Environmental sustainability
- Fewer costs
Advantages of blockchain in real estate
What advantages does blockchain technology currently provide the real estate industry? Real estate industry can benefit from blockchain in the following ways:
- Identity of the proper tenant and investor
- Property sale
- Real-time accounting
Advantages of blockchain in trade finance
What benefits can trade finance currently get from blockchain technology? The following are some ways that blockchain can help trade finance:
- Data integrity
- Streamlined process
- Market reactivity
- Cost savings
Advantages of blockchain in government
What advantages does blockchain technology currently offer to a government? The government can benefit from blockchain in the following ways:
- Identity management
- Fair elections
- Finance management
Advantages of blockchain in logistics
Which benefits does blockchain technology now provide for logistics? The logistic sector can benefit from blockchain in the following ways:
- Improved freight tracking
- More suitable carrier onboarding
- Vehicle-to-vehicle communication
- Security for the Internet of Things (IoT) Devices
As you can see, there are a lot of advantages to the blockchain. But unfortunately, like everything else in the world, blockchain technology has some drawbacks too.
Disadvantages of blockchain
Since many blockchain solutions are experiencing early-stage issues, blockchain is not without its drawbacks and troublesome characteristics.
These are some of the most common disadvantages of blockchain:
- Power use
- Private keys
Let’s take a closer look at them.
Blockchain applications are quite well-liked by Bitcoin investors. However, it can only process seven transactions per second, compared to 10,000 for Hyprledger and 24,000 for Visa. With the issue of scalability in mind, it becomes more difficult to envision how blockchain could be used in practice.
Due to mining operations, the Blockchain has a somewhat high power usage. One of the reasons for this usage is that every time a new node is created, it simultaneously connects with every other node to maintain a real-time ledger.
The issue of storage arises because blockchain databases are permanently kept on all network nodes. There is no possibility that personal computers can hold an infinite amount of data that keeps getting added to as the number of transactions rises.
All nodes in the network have access to encrypted and anonymous data on a public blockchain. Therefore, this data is legitimately accessible to everyone on the network. Transactional data may be used to identify a person in the network, just as corporations typically use web trackers, cookies, and other tracking technologies.
As has been noted numerous times, excessive security can also be a weakness in the case of private keys. Once lost, these keys are virtually impossible to retrieve, which presents a challenge, particularly for those who possess cryptographic valuables.
Regulatory frameworks in the banking sector present difficulty in adopting blockchain. Blockchain applications will need to specify how to identify the fraudster if one occurs, which is a difficult task. For blockchain technology to be widely adopted, additional regulatory requirements must first be established.
Over time, it has been clear that the Proof of Work consensus method, which safeguards cryptocurrencies like Bitcoin on the blockchain, is extremely effective. However, there are a few potential ways to attack blockchain networks, with 51% of attacks being one of the most widespread.
Such an attack may occur if one party gains control of over 50% of the network’s hashing power. In that case, they would be able to intentionally exclude or alter the order of transactions, disrupting the network.
Don’t you know what is 51% attack? Check out our blockchain glossary
Which industry can benefit from blockchain?
Despite its disadvantages, the ability of blockchain technology to arrange data efficiently has led to the growing availability of this technology across industries.
Do you know which of the 4 types of blockchain is right for your business?
We have already explained some sectors that are heavily affected by blockchain above. Followings are some of the industries that seriously make benefit from blockchain technology too:
- Law enforcement and security
- Supply chains
- Software security
- Messaging apps
- Travel and mobility
- Product development
- Higher education
- Blockchain in HR
Why is blockchain the future?
At least one cutting-edge blockchain-based company will be valued at $10 billion by 2022. The extra value that blockchain technology brings to business will reach slightly over $360 billion by 2026 and more than $3.1 trillion by 2030.
Check out the best blockchain platforms
Blockchain will establish a reliable, uncensored, and accessible global data and information repository. This quality will guide the development of the third generation of the internet.
The internet is driving everything in the world now, and it will be the same in the future. In this context, what drives the internet also drives the future. That’s why blockchain is the future.
Blockchain is a revolutionary technology that has a big impact on practically every business. Blockchain networks, however, have the potential to be both benefits and drawbacks, operating as a double-edged sword that might operate both in favor of and against the broad adoption and use of this technology.
Understanding the technology will help people succeed in the future, whether they are experienced blockchain developers or are hoping to break into this fascinating sector.
Learning as much as you can about blockchain is the most obvious advice. Blockchain should not be confused with Bitcoin or other cryptocurrencies. A blockchain is used by bitcoin. However, a blockchain is not bitcoin. Blockchain technology has much more utility than just how cryptocurrencies initially implemented it.