A Guide On Understanding The Advantages and Disadvantages of Blockchain Technology
Only when we find that the pros outweigh the cons do we go ahead and start using it. Why should blockchain technology be any different? You need to have a proper understanding of the benefits this technology is capable of offering along with the limitations or drawbacks it has. So, let us take a look at them.
Of course, blockchain technology is advantageous. Otherwise, there would be no point for the various organizations to invest in their experiments with it. So, what are the advantages? Let us take a look at some of them.
Trustless Exchange and Disintermediation
Disintermediation is one of the major features of blockchains. It allows two parties to conduct an exchange without requiring the presence of a third party who can act as in intermediary or even oversee the exchange.
This certainly speeds up the exchange. More importantly, it is capable of reducing the risks of a counterparty. In fact, it might even eliminate counterparty entirely.
The Empowerment of the Users
This is something that is gaining traction in the world in various spheres of life these days. More and more people want to be in control of the information they share. This has led to innumerable debates on the dissemination of user information through the internet.
In the case of blockchain technology, there are no such worries. It inherently allows the users to remain in control of all the information. They can exercise the same level of control over their transactions.
The High Quality of Data
In a blockchain, the data is always synchronized. This helps in ensuring that the data is always complete and consistent across all nodes. Apart from the accuracy of the data, the fact that it is always available on time is a major benefit.
Additionally, the data is disseminated across all the nodes and updated. As such, its availability is another benefit of blockchain technology. After all, it is possible to get the latest data simply by accessing the network.
Enhanced Level of Protection
It is the inherent features of blockchains that make them so beneficial to organizations. Consider the decentralized nature of the blockchain technology. The absence of a central location means that there is no single point of failure.
As such, it is not possible for anyone to hack a single node to gain control of the network. This increases the resiliency of the overall network against malicious attacks.
Blockchain technology does not only possess a high level of durability but also enhanced longevity. After all, the network will remain unaffected even if the data at one node gets corrupted.
The Process Integrity
There is often a concern of integrity as to the execution of transactions via traditional methods. This is not an issue with blockchains as it will contain protocols in place.
As such, the users can trust their transactions to be executed in the exact manner specified by the protocols. There is no need to find and get a trusted third party to oversee things.
The Presence of Immutability and Transparency
Transparency is vital in transactions just like the confidentiality of the users. In a public blockchain, all the changes made will be viewable publicly by all the parties involved, resulting in transparency.
Transparency ensures that the users remain on top of all the transactions that are taking place allowing the building of trust. Immutability is another crucial benefit. Any transaction that takes place will be immutable which means that they cannot be changed or deleted in any way. This can prevent cases of fraud.
Simplification of the Ecosystem
There are certainly a number of issues involved in maintaining multiple ledgers. In those cases, there is a greater scope for confusions.
Moreover, there is going to be more clutter to deal with when conducting reviews of searches. A single ledger gets rid of all of these complications. This is why blockchains are considered to be a better approach by many.
The Speed of Transactions
One of the greatest benefits of blockchain technology lies in its ability to speed up transactions. A transaction between organizations can take many days to be settled finally. First, the transaction will be reviewed and then cleared before ultimately being settled.
There are also the working hours to consider as these activities will not be taking place outside of the designated hours. The blockchain technology can change all of this. It can reduce the times required for the transaction to be settled to just a few minutes. More importantly, the transaction can be processed 24/7.
Decrease in Transaction Costs
This is a significant benefit offered by blockchain technology and one of the major reasons why organizations are interested in it. In a blockchain, there is no need for any third parties and intermediaries.
As such, any expenses related to them are instantly eliminated. Moreover, there are no overhead expenses related to the exchange of assets. These things enable blockchains to have the potential of greatly reducing the fees associated with each transaction.
Published at Sat, 08 Feb 2020 00:18:51 +0000
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