What is Blockchain technology?
Blockchain technology, as its name suggests, is a structure that stores digital information (called block) in a public database (called chain) in a network connected through peer-to-peer nodes. Also, this storage is known as “digital ledger”.
This was merely the explanation; let’s now help ourselves with the ultimate guide to blockchain technology by looking into the pros and cons of this technology:
Benefits of Blockchain technology:
Transparency:
We all want a transparent system and blockchain ensures that. Because of its distribution ledger, the participants of all the networks share the same documentation and not individual copies. And to change this all the participants should agree on it. This prevents third parties like banks and governments to take over these. It goes further by allowing everyone to have access, verify, and audit data and transactions.
Stability:
Once the data has been entered into the system, then it becomes extremely difficult for anyone to alter or change it. This makes it very stable as there will be a security that can be used as a great place for storing financial data and other crucial information as any change can be tracked down. Not only tracking but also it will be permanently recorded in a public ledger.
Distributed:
The data stored here is transferred to thousands of devices which makes it resistant to technical errors and other attacks. It has a system, which makes each database to replicate and store a copy of the data and this prevents the failure of the entire network that can be caused by an error in any single node.
Faster processing:
The traditional banking system took a lot of time processing and initiating before the introduction of blockchain, but now because of blockchain, the processing has increased tenfold. For instance, in the previous banking systems, the whole process took around three days for completion but after blockchain, it can be completed within a fraction of seconds.
Disadvantages of Blockchain technology:
Private keys:
Blockchain uses public-keys cryptography to give users ownership over their blockchain data. Each blockchain address has a private key that should not be shared, so if by any circumstances the key gets lost then the money and the data of the user will be lost forever. And nothing could ever be done about it.
High energy consumption:
The feature of communicating with each node at the same time as the creation of a new node makes the energy consumption of blockchain very large. It is estimated that the power consumption of blockchain users is alone higher than the per capita power consumption of 159 individual countries.
51% attacks:
Now, this is the most prominent disadvantage that Bitcoin users have to encounter. This happens when one user or entity gains control over nearly 50% of the network which can cause then to hamper the network by intentionally excluding or modifying the ordering transactions.
Maintenance cost:
Because of the high storage of every Bitcoin user that estimates to nearly 100GB, the cost becomes very high to maintain all this high amount of data. It can be said that the average cost of a Bitcoin transaction is $75-$160 by energy consumption.
“The blockchain does one thing: It replaces human trust with mathematical algorithms.”
So the bottom line is that like every other system, blockchain has its advantages and disadvantages. But still, it can be used in a variety of ways that will ultimately complete the purpose of blockchain technology. And I hope that this list of fors and againsts would have provided you with everything that you need to know about blockchain technology.