Since its inception, this technology has come a long way and emerged as one of the most influential technologies in the world. The Blockchain has established itself as one of the incontestable technologies in the field of business transactions. However, it has its own set of limitations which may make its system less favorable for some traders.
Therefore, for any user, it is important to weigh the pros and cons of Blockchain technology. Based on the result, one should decide if it’s worth investing the time, effort and money.
However, before listing pros and cons, one should understand what Blockchain technology actually is?
Brief explanation of Blockchain Technology
Essentially, the Blockchain is a specialized kind of database used for the storage of essential data and information. Since it is a database, one can store information involving different types of digital data. This could include transaction records detailing the trade of one or more cryptocurrencies. Or it could involve the personal files that someone stored in a cloud-based system. It could also involve the learning credentials of a user.
But the similarity of this technology with other databases ends with functionality. The infrastructure and functions of the blockchain is radically different from other databases. The primary reason for this is its decentralized nature. Consequently, no-one can access all the data from one single location. Additionally, no single authority has complete control over the whole database and its transactions.
The data in a Blockchain is evenly spread across multiple individual computers/nodes, which are under the control of different people. Since there is no one single point of control, it becomes harder for hackers to access data from multiple nodes. Similarly, the data cannot disappear from the database unless the network computers suffer from unsalvageable damage.
In the case of other conventional databases like PostgreSQL, MySQL, Cassandra, etc, the system is centralized and under the control of a single entity. Therefore, it’s completely up to the discretion of the controlling authority to make decisions regarding the network and the data. In such a case, the users on the network have no power.
Merits of Blockchain Technology
Due to the decentralized nature of the blockchain network, this system enjoys many special advantages over other databases:
- The distribution of the data over multiple nodes makes it hard to commit fraud; even unauthorized manipulation of the information is challenging.
- The data on the Blockchain network is transparent by its inherent nature. This means all the transactions are visible to all the users on the network. As a result, users feel more confident regarding the security of their information.
- Data distribution across multiple nodes provides resilience against many types of damage like infrastructure failure and data loss.
- In the majority of cases, the data stored on a Blockchain network enjoys immutability. This means that once data is stored on a Blockchain network, it’s impossible to erase it. The catch here is that not every Blockchain offers this feature. However, this was a core feature of the Bitcoin Blockchain, and as a result, other Blockchains may follow suit.
The impact of the above mentioned benefits is far-reaching. Thanks to decentralization, the application possibilities for Blockchain technology are endless which is not the case with conventional centralized databases.
Developers can use the technology to build a social network that can offer innovative means of ensuring user privacy. It can add security to the the devices on the Internet of Things. In the healthcare sector, it can improve patient privacy.
Demerits of the Blockchain Technology
- Delays in Transactions: This particular factor is one of the biggest limitations that most of the Blockchain networks suffer from. The process of registering transactions on this network takes a long time; typically up to a few hours. One way of circumventing this limitation is to make use of some off-chain network transactions. However, it still takes time and isn’t instantaneous.
- Vulnerabilities in its security feature: The data stored on the network is vulnerable to many kinds of security breaches. Blockchains can resist fraud as long as the majority of the users comply with the network rules. For any data modification using this technology, a large number of the users have to provide their consensus. However, when a hacker can access the data without involving the user consensus, this security vulnerability could lead to a massive data loss.
- No guarantee of complete transparency: Most users move their data, like for company projects, onto the Blockchain to ensure greater transparency. However, when the Blockchain runs on a closed-source application, this transparency has limits. This means that only a few people would be aware of the functioning of the software, even if the data is visible to all.
- The ‘fork’ risks: As a result of the decentralized architecture of Blockchain technology, there is a risk of one part of the network forking off. This occurrence of a split in the Blockchain community is not a rare phenomenon and occurs frequently. This kind of occurrence many not be catastrophic, but it may have adverse results. One scenario could be the modification a Blockchain protocol which may end up damaging an application on the network.
Undoubtedly, there are many more benefits involving Blockchain technology than there are demerits. But, it depends on the users as to how significant the drawbacks are.
For most, it is a revolutionary method of storing data in a trustless, immutable and hack-resistant environment. Therefore, it make sense that more and more global organizations are adopting this technology for their data transactions.
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