What are the Advantages of using Blockchain Technology

A blockchain is a network of decentralized and distributed data (ledger), which means that users share ownership and control of the network via computer nodes. As a database, the blockchain stores information in a digital format. And Advantages of using blockchain technology you can learn in this article.

Blockchain technology stores data in blocks and links them into a chain. The blocks have a certain capacity and when they are filled, they are closed and connected to the previous block.

Blockchain is known for its important role in cryptocurrency systems such as Bitcoin. It maintains a decentralized and secure registry of crypto transactions. Therefore, the blockchain can ensure the reliability and security of records and create the need for a third party.

Why is blockchain important?

Traditional database technology presents several challenges for recording financial transactions. For example, consider selling a house. When money is exchanged, ownership of the property is transferred to the buyer. The seller can easily claim that he has not received the money even though he has received it, and the buyer can just as easily claim that he has paid the money even though he has not received it.

To avoid potential legal issues, a trusted third party should review and validate the transactions. The presence of this central authority not only complicates the transaction, but also creates a single weak point. If the central database is compromised, both parties can suffer.

Blockchain mitigates such problems by creating a decentralized, tamper-proof system for recording transactions. In a real estate transaction scenario, the blockchain creates a ledger for both the buyer and the seller. Any corruption of historical transactions leads to corruption of the entire ledger. These characteristics of blockchain technology have led to its use in various industries, including the creation of digital currencies such as bitcoin.

Advantages of blockchain over non-blockchain databases

  • Immutability:

Blockchain supports immutability, which means that it is impossible to delete or replace recorded data. Therefore, the blockchain prevents data from being manipulated within the network.
Traditional data does not demonstrate immutability. The traditional database uses CRUD (Create, Read, Update and Delete) at the primary level to ensure the correct operation of the application, and the CRUD model allows for easy deletion and replacement of data. Such data may be vulnerable to manipulation by fraudulent administrators or hacking by third parties.

  • Transparency:

The blockchain is decentralized, meaning that any network member can verify data recorded on the blockchain. Public can trust such network.

On the other hand, a traditional database is centralized and does not support transparency. Users cannot verify information at any time and the administration reveals a selected record. However, individuals cannot review the data.

  • Censorship:

Blockchain technology is free from censorship because it has no control over any single party.
At the same time, traditional databases have central authorities that regulate the operation of the network and the authority can exercise censorship. For example, banks can block users’ accounts.

  • Traceability:

Blockchain creates an irreversible audit trail that makes it easy to detect changes in the network.
The traditional database is neither transparent nor immutable; Therefore, no permanent path is guaranteed.

Disadvantage of blockchain

  • High implementation costs:

Companies need good planning aanalysis to determine whether blockchain technology meets their needs and then plan development or migration to Web3 accordingly.nd execution to integrate blockchain into their process.
No one solution covers all requirements, as does blockchain technology. There is a lot of excitement in the industry around blockchain and Web3, and many organizations want to move from Web 2.0 to Web3, but this is not an easy “lift and shift” solution. Organizations should conduct their due diligence and in-depth.

  • Energy consumption:

The energy consumption in blockchain is relatively high due to the mining operation. Keeping a real-time ledger is one of the reasons for this consumption, because every time a new node is create, it communicates with all other nodes simultaneously.

  • Cost:

Each crypto transaction also requires a lot of energy. The chance that this problem can be solve through technological development is much less. The other factor is that the memory problem can be maske by power problems that cannot be solve.

  • Immature:

Blockchain is a technology that is only a few years old, so people do not have much confidence in it and are not willing to invest in it, but different uses of blockchain work well in different industries, but it still needs to be further develope more from people’s trust recognize for its full use.

  • Legal formality:

Modern money was create and controlled by the central government in all parts of the world. It is becoming an obstacle to the acceptance of Bitcoin by the financial institutions that already exist.

  • 51% Attacks:

The proof-of-work consensus algorithm that protects cryptocurrencies like bitcoin on the blockchain has proven to be very effective over the years. However, there are some potential attacks that can be launche against blockchain networks, and 51% of the attacks are among the most common. Such an attack can occur when an entity manages to control more than 50% of the network’s hashing power, ultimately allowing it to disrupt the network by intentionally excluding or reordering transactions.

  • Debugging:

The application must be update or shared on every node in the peer-to-peer network if some of the nodes do not accept the changes.

  • Special purpose networking capabilities:

There is business logic behind all applications. The logic defines how new applications should work in relation to the business requirements. Blockchain inherently uses a strict logic that does not allow redesign without loss of benefits, resulting in business logic changes required to be acceptable to the blockchain solution.

  • Development Difficulties:

Applying very complex protocols to build consensus and scale from scratch is very important. You can’t rush an idea in hopes of later adding new features and extending the application without redistributing or splitting the network.

  • Inefficient:

Blockchains, especially those with proof of work, are very inefficient. Since mining is highly competitive and there is only one winner every ten minutes, every second miner’s work is waste.

  • Storage:

The Bitcoin blockchain currently requires about 200 GB of storage space. The current growth in blockchain size appears to be outpacing disk growth, and the network risks losing nodes if the ledger becomes too large for individuals to download and store.

  • Scalability:

This is one of the major disadvantages of blockchain technology as it cannot scale due to the fixed size of the block used to store information. The block size is 1MB, which means that only a few transactions can be store in a single block.

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