People and corporations may now connect in new ways help of the internet. This may be seen in the growth of several social networks where individuals can build, identity, and operate on their own conditions.
Blockchain technology brings it to the next level, allowing users who have no other connection than the fact that they access the similar network to engage and exchange value.
The advantages of Blockchain are numerous, but do you understand why it is the technology of the future? Distributed Ledger Technology (DLT) is a decentralised database that is managed by multiple people (DLT).
Yes, when related to standard database methods, Blockchain is an innovative solution. Furthermore, it is not controlled by a single company; there is no risk of manipulation or control from any one group. As a company owner, I understand you may be considering implementing Blockchain, but you are still confused.
To help you get out of this bind, I’m going to go over some of the most important benefits and drawbacks of Blockchain. So, be prepared to dig in and learn about some incredible Blockchain pros as well as some drawbacks.
The 10 Most Important Benefits of Blockchain Technology
1) Provides Global Trust
One of blockchain’s main advantages is that you don’t have to rely on a third party to complete a payment. It allows people all across the world to work together since they know that no major group can control transactions, read personal details, or take any acts that compromise their privacy and safety.
That just doesn’t guarantee blockchain-based software are consistently safe varies on how skilled programmers are at writing secure code but it does suggest that they have the potential to be more secure than normal apps. You may have more confidence in your information and identification with blockchain.
2) Low Operational Costs
One of Blockchain’s main advantages is its low operational costs. Since there is no centralised authorities, there have been no systems to manage, which significantly reduces operational expenses.
Transaction handling and banking charges are also eliminated due to the decentralised structure of the system—transactions are open access and do not involve a third party. Agreements are not monitored or enforced by a third party. Whatever papers, contracts, or activities can be embedded in a blockchain.
Lastly, even though blockchains are encoded, they provide an additional degree of protection from data theft that normal payment systems just cannot match.
3) There are no individual points of breakdown
There is no clear point of failure with blockchain technology. If a hacker gained control to your company’s server or database, he could simply wipe out your total system in one easy step.
This implies that if you store your files on a single system and that connection goes down for any purpose, you risk losing all of your information. Because blockchain technology is decentralised, hackers won’t be able to break into a single central network and damage all of the accounts tied to it.
4) Improved Security & Confidentiality
The blockchains are naturally more secure than the centralized systems as they are distributed across the global networks of computers and are protected by cryptography.
According to the reports provided by the economist, it is not possible to tamper the records once they are stored inside the blockchains. If anyone attempts to alter the records will be caught immediately as the copies and digital signatures are checked automatically with each other. In simple words, the hacker won’t be able to tamper with your data and it will be saved from them. The blockchains have added an extra layer of security as the transactions are nontraceable and they do not link back to any individual user.
Furthermore, the blockchain provides the service of letting the user choose if they want their name and email to appear on the transaction or not, if the user decides that they don’t want their name and email to be displayed then they can remain anonymous. Meaning that the user can use all the services related to the blockchain without worrying about the advertisers tracking their activity and this also saves the user as it makes it very difficult for the thieves to access sensitive information like the credit card number.
5) Faster Transactions
Blockchain is way faster when it comes to transactions than any other traditional bank, and as a result, companies using the blockchain for the transaction save a considerable amount of money that they pay to that bank.
Deloitte conducted a survey did some research and gave a conclusion that blockchain technology can help multinationals companies save up to $20 billion in banking fees per year by 2022.
This cost reduction takes place due to the blockchain decentralized structure, which does not demand any kind of massive data centers and very expensive third-party verification, not only this the blockchain technology even requires less number of employees.
6) Reduced Fraud
Blockchain technology has some amazing features that make it ideal for financial institutions to reduce forgery, this is because a digital ledger keeps a track of every transaction so no one can spend their money twice by mistake.
Each block in the blockchain technology stores the information related to the finance of the user and If there is any change in the previous block, other nodes on the network reject the change, meaning once there is confirmation from the mank that the money transfer was successful, the receiver cannot say that they did not receive the money. Not only this, the user will be able to see that some kind of fraud took place when there was a change in another node related to the transaction.
Before making the next point, there is a small piece of advice for the companies who are thinking of deploying the blockchain technology in their company, since this technology is relatively new and needs some expert guidance, the companies should hire someone expert in the field of blockchain technology.
7) Transparent & Universal Recording System
Once a transaction took place, the record of that transaction is stored in a public ledger, meaning that anyone can take look at someone’s wallet without knowing anything about the owner and they can see how many coins are there in that particular wallet.
A wallet can be linked to an individual or a group of people, but if the user wants to remain anonymous, they can transfer their bitcoins in a wallet that is not linked with their real identity but is owned by them.
Even while not namelessness options enabled, blockchain technology permits for a lot of transparency than ancient payment strategies like credit cards and checks. No bank negotiant is needed (or permission to check what or from whom you paid or received money).
8) Better Accessibility
If someone owns a computer and has an internet connection then they can be a part of the blockchain technology. Blockchain technology is decentralized, meaning that it cannot be controlled by a single entity but still everyone has equal access to it.
Anyone can make changes in blockchain technology if they know how to do so. If the user knows how to add information or how to add a new block to store data they can do so. Even a person who does not know the technology can be a part of blockchain technology. This openness is the reason for blockchain technology being much more accessible than any other traditional banking system.
That doesn’t mean ought to|you ought to|you must}n’t be cautious once addressing blockchain providers: you should continually analyze your decisions before creating any important monetary choices.
9) Prevents double spending
Bitcoin transaction when takes place they are verified by the network nodes of cryptography and recorded in a public distributed ledger known as the blockchain. This ensures the user the risk of double-spending by eliminating direct access to their money.
That’s why some individuals say bitcoin is fungible—its price is equal although its physical kind changes. In alternative words, in contrast, to act currency like U.S. bucks or euros that get their price from Associate in Nursing organization’s money standing, bitcoins derive their value from arithmetic alone.
It may sound silly to place confidence in a private bitcoin as being a clone of the other bitcoin, but it’s true; every single bitcoin carries with it all of its transactional histories among that individual blockchain framework.
Once you own a bitcoin, though, it’s yours forever; there’s no threat of anyone ever taking that aloof from you. And once again: since there’s most discussion close what percentage of bitcoins are going to be free over time, there’s only 1 thanks to noticing out-by shopping for them!
10) Seamless Integration Into Existing Systems
Blockchain offers businesses a way to integrate their current financial systems with outside networks seamlessly. There are two ways to do so – Blockchain as a Service (BaaS) and blockchain application platforms.
BaaS provides a secure connection to the blockchain networks using cloud services, while the blockchain application platform is there to provide the blockchain services to the user without any cloud. The integration process is much more seamless than other means of blockchain access.
Blockchain technology as a service provides the facility of direct connection with the blockchain connections, immediately giving them access to all the services provided by the decentralized ledgers. It is not like they force you to use one type of blockchain or another, they also provide higher control methods than any other method.
Additionally, BaaS is usually faster and easier to line up than different services, creating it ideal for organizations that will like blockchains directly, like offer chain management applications.
5 Significant Drawbacks of Blockchain Technology –
1. Scalability – At the current time blockchain can handle a few numbers of transactions per second, meaning if a platform like BitCoin has to process the peak of visa that is 4000 transactions per second it would take more than eight full days for all transactions to be finalized. There are many solutions proposed to the blockchain but none of them were applied in a way that will increase the number of transactions per second.
2. Security – The ledges of the blockchain are public so they are pretty well accessible to everyone, even though there are provisions to add privacy and increase the encryption layers of the blockchains they are not commonplace yet, meaning anything the user does on the network can be monitored by anyone who has the internet connection and that’s a major con for the user who demands privacy. Furthermore, most of the data is connected directly to the digital identity (i.e., public keys), and it has the potential to expose the parts of the user’s private life that no one would like to be posted online. Individuals typically trust third-party solutions (like exchanges) over direct blockchain transactions due to security concerns, so ceding control over personal assets.
3. Cost – This is the major problem with the blockchain network. The mining of the cryptocurrency requires an enormous amount of energy as the miners have to solve very complicated Maths problems to get the payout, for mining the miners need powerful systems and that requires a ton of electricity. And all these problems lead to an increase in the running cost of the blockchain, and they are hard to afford for small businesses or individuals. And you won’t be able to alter your mind later; if you want your blockchain online, you must pay for it right away!
4. Competitiveness – With all the hype of the blockchain most of the companies are trying to use it, and with all these companies trying to deploy blockchain there is an unnecessary competition growing within the companies and It may be hazardous to individuals attempting to apply it professionally and is causing harm to some businesses by wasting time, money, and effort on technology that isn’t even required, and with all this competition the companies won’t have any other choice than investing heavily to keep up with the competition.
5. Speed – Another key disadvantage of blockchain technology is its slowness. Blockchains, as opposed to centralized databases, necessitate miners—individuals with high-end computers and specialized software that solve computational challenges in return for fresh crypto tokens. Simply put, blockchain transactions take longer to complete than traditional payment methods such as cash or credit cards. If you want to use blockchain technology as a daily payment method, this might be disappointing.
Final thoughts –
Blockchain technology is a game-changing method of storing and moving data. While it has certain drawbacks, most of them can be mitigated with proper design and implementation. Because of the current state of blockchain technology, it is best suited for organizations that seek to use its distributed ledger characteristics. However, the technique is not as straightforward as it appears. As a result, I would once again advise you to employ Blockchain developers with expertise and the necessary abilities. Otherwise, your company may suffer.