Blockchain is an open-source database where individuals and businesses can collaborate. People on a blockchain network are connected through a project with no need for any previous affiliation. Blockchain is a decentralized network; no single entity is in control. This technology moves away from the idea of traditional database systems.
If you are new to blockchain, an easier way to understand the concept would be to derive direct meaning from the name. Blockchain is a technology linked together in a chain, and all the data is stored in blocks creating the blockchain. The best and most famous example of blockchain in action is its association with the cryptocurrency Bitcoin. It maintains all the Bitcoin transaction records and ensures they are stored securely.
You can start your career in the blockchain industry by getting the blockchain certification online. You will be introduced to most blockchain concepts to help you get better job opportunities.
Advantages of Blockchain
With blockchain being such an advanced technology, it has many advantages. Blockchain has eased out many processes, whether it is being used for cryptocurrency transactions or fiat transactions.
Some pros of blockchain are:
1. Immutability
All the data that is fed into the blockchain is immutable. This means that once the blockchain receives information, it cannot be changed or erased. A record of that data will always be stored on the network eliminating any risks of data tampering.
So in case of a breach in security, which is a rare occurrence with blockchain, you can be assured that hackers will not manipulate your sensitive data.
2. Transparency
Anyone part of the blockchain network can access the data recorded because of the transparency blockchain provides. This makes the networks trustworthy and allows users to verify the information in the database.
Additionally, there is also anonymity provided by the blockchain. If users do not want to share the history of their transactions with the public, they can carry out the transactions anonymously from a different address.
3. Decentralization
All the transparency blockchain provides is because of the network being decentralized. This means that no person or organization is responsible for making edits to the data. If a record has to be altered, all the network members must contribute to the change.
Takeover attempts and corruption from banks or governments are impossible because of decentralization.
4. Security
Every person who wants to join a blockchain network has to verify themself, and then they are provided with a unique identification number. This adds to the network’s security, and no outsider can join a network they are not supposed to be in. Furthermore, hackers cannot access the network if they do not present their identification.
The account owner does a transaction that needs to be carried out, and all transactions are encrypted.
5. Efficiency
Transactions with blockchain also take a short time nowadays. As a result, financial transactions’ overall efficiency has increased since blockchain entered the market. From initiating a transaction to completing the process, it all can be done in a matter of minutes, whereas before, it took hours, if not days.
Disadvantages of Blockchain
Understanding blockchain means understanding the good and the bad. Let’s look at some common disadvantages of blockchain technology.
Here are the cons of blockchain:
1. Scalability
The scalability issue comes when multiple transactions are happening simultaneously on the blockchain. This results in delays, and the efficiency of the transactions is knocked down.
2. Cost
Blockchain requires a lot of energy to function. This results in a massive hike in the electricity bills of those using the technology. Smaller organizations or individuals on blockchain will find the technology costlier than huge businesses.
While the blockchain infrastructure will look cheaper for an onlooker, other costs get added, making it an overall expensive solution for anyone on a budget.
3. Competitiveness
Blockchain is a new technology, meaning every business wants to get its hands on it. This has created unnecessary competition among companies, and if an organization does not use blockchain, they soon start feeling out of touch with the market. Many companies are investing in blockchain technology not because they need to but out of competitiveness.
If your organization is one of these, you jump on the blockchain bandwagon without fully understanding it. This could lead you to make the wrong decisions for your business to stay ahead of the curve.
4. Performance
There are also higher expectations from people for blockchain as it is the latest technology. So people expect it to be faster because of all the high-end computers. Blockchain professionals have to spend a lot of energy to create an application. The software used to solve all those complex puzzles raises the expectation of users regarding the performance of blockchain.
Nevertheless, unfortunately, these transactions take longer than traditional methods and therefore are not practical for daily transactions.
5. Data modification
While not being able to modify data that is once recorded on the blockchain easily is a great security measure, it becomes a hassle when you need to fix a mistake or make adjustments. Engineers on a project have to rewrite the codes all over again for every block in the blockchain.
Unless you are ready to sacrifice that much time, money, and energy on your project, you should think of solutions other than blockchain.
Conclusion
Blockchain is creating many opportunities in the market. You can even say that it is transforming the world. But, of course, there is still the novelty of the technology, making it easy for everyone to only focus on the pros. However, let us remember that just like any other technology out there, blockchain also has its notable cons.
After evaluating the pros and cons, you must have a clearer idea of what you want for your business.
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