The growth of cryptocurrencies has led to the growth of blockchain technology. Blockchain is a general time that people use to associate with bitcoin, a cryptocurrency made with the technology. Bitcoin blockchain has data blocks that are connected to a chain. The introduction of this technology created several advantages in the field of industries. However, it also has major disadvantages. Here are the pros and cons of blockchain.
1. Irreversible. Blockchain is stable and cannot be reversed. It is not easy to change or remove data after it has been put into the blockchain. For this reason, blockchain has become the best method to keep financial records. In addition to that, it is great for audit trail seeing that changes are tracked and are recorded permanently. As an example, entrepreneurs can incorporate blockchain to prevent corruption from the employees. Blockchain will give safe financial records of transactions. Henceforth, employees cannot hide suspicious transactions.
2. No technical failures. A Blockchain is kept in many devices through a distributed nodes network. Therefore, data and systems are resistant to attacks and technical failures. This is because the network node can keep a copy of the database hence it will never fail. Moreover, security will not be affected even if a single node is offline. Conversely, most databases are not distributed thus they are vulnerable to attacks and failures.
3. No third parties. The most traditional form of payment involves two parties. They depend on intermediary including company, credit card, bank, or provider for payment. On the other hand, blockchain does not require another party. This is because it has distributed network nodes that use the mining process to verify transactions. Therefore, blockchain is known as “trustless system”. it helps to lower risks of depending on an intermediary for transactions. Also, it reduces transaction fees by not involving third parties and intermediaries.
4. Large storage. Blockchain needs 200GB for storage. The growth will become big over the coming years. The growth of blockchain makes it hard to fit on hard drives. this is risky because you can lose nodes if the ledger is large for users to download and store.
1. Ineffective. Blockchains which involve proof of work is ineffective. Mining has competition and only one person is a winner for every ten minutes. This means other miner’s work is wasted. Moreover, miners are striving to add computational power to increase the chances of getting valid block cash. The resources used to need more energy.
2. Public keys. Blockchain uses asymmetric or public-key cryptography for giving miners ownership of blockchain data or cryptocurrency. Corresponding private keys are found on every blockchain. Private keys are used to get funds. Money is lost if a miner loses the private key. These are the consequences of public keys.
3. No modification. This is a major limitation of the blockchain system. After data is added to the blockchain, it is difficult to modify it. Even though blockchain’s stability is an advantage, it is not always a good thing. It is hard to change code or blockchain data. It needs to remove one chain and replace it with another.
4. Potential attacks. Blockchain has been effective for several years but potential attacks can take place. Regardless of that, security increases as technology grow. Blockchain is resilient and will respond to any attacks.