Blockchain is the technology behind digital assets. It is the indestructible ledger responsible for recording economic transactions and can be programmed to maintain financial transactions and anything else that has value.
It is a decentralized ledger that is not controlled by a third party or financial institution. No technology is perfect or flawless and the Blockchain technology is one of them. Let’s take a look at some of the advantages and disadvantages of the blockchain technology.
- Secure – Since it is an open source ledger, every transaction is made public. This leaves no room for fraud. The integrity of the blockchain is monitored by minors who have their eyes on all the transactions.
- No third party interference – No government or financial institution has control of the cryptocurrencies based on blockchain technology. This means no government can meddle with the value of the currency.
- Secure transactions – The blockchain responsible for keeping record of all the transactions cannot be edited or manipulated. Both ends of a transaction and the public can view the transaction data at any given time. This makes online transactions more secure.
- Instant transactions – Blockchain technology transactions are completed in a few minutes. Take for example a bank transaction made to a person with a different bank account. It takes two days minimum to complete the transactions. At this time, the person doing virtual transactions with crypto can complete a series of transactions.
Just like a cryptoasset, blockchain technology also has two sides. Here are some of the disadvantages of the blockchain technology.
Difficulties with Updating and Elimination of Errors
The application must be updated on each node of the P2P network or forked if any part of the nodes don’t accept the amendments.
Network Robustness for Dedicated Purposes
All applications have a business logic behind them. The logic defines how new applications must work in terms of business requirements. By nature, blockchain employs a strict logic that doesn’t allow redesign without the loss of benefits leading to the need for logical business changes to be acceptable to the blockchain solution.
Difficulty of Development
Applying very complex protocols to achieve consensus and allow for scaling from the beginning is very important. One cannot hastily implement an idea hoping to later add new features and expand the application without redeployment of the network or forking.
Applications don’t normally require third-party APIs to store and retrieve data. The decentralized app shouldn’t also depend on other Dapps. This might sound good in theory but causes difficulties in practice.
- Crime – Some applications need to verify the identity of a user since there is no central authority to assure the identity of the user, the development of certain decentralized apps becomes a serious problem.
The anonymity or lack of user identification is a serious hindrance and is used by criminals to do illegal transactions.
- Technology for the geeks – Most people consider the blockchain technology to be for tech savvy people. You have to be familiar with technology to make a transaction, store crypto, trade it and so much more.
- Human error – The blockchain technology can’t be edited or modified meaning all the information on it has to be 100% accurate. If for example, you lose the Private Key used to access the blockchain, it’s almost impossible to get access to the network.