ADVANTAGES AND DISADVANTAGES OF BLOCKCHAIN TECHNOLOGY

 ADVANTAGES AND DISADVANTAGES OF BLOCKCHAIN TECHNOLOGY

Blockchain offers a number of advantages which include:

1) Decentralization: it cannot be controlled by any central authority and also provides a transaction without any third party.

2) Transparency: the complete transaction history is available to everyone

3) Automation: activities could be automated with smart contracts.

4) Better attack resistance due to its nature of distribution, in which the system relies on multiple individual components. Thus, it will be hard to fail or be targeted by a cyberattack.

5) Potentially lower transaction costs and faster transaction times when compared to the traditional system in the current scenario.

However, blockchain is more of a double-edged sword. It also comes with

the following disadvantages:

 

1) When compared to the traditional existing banking system in certain circumstances, such as a domestic same bank transfer, potentially higher transaction costs and slower transaction time might occur due to its high-power consumption with constantly updated hardware requirements for mining and data storage.

2) Blockchain comes with potential environmental issues due to the huge power consumption. It is a peer-to-peer network.

3) The security issues, risks of theft activity, and cyberattacks are still right there although the system is distributed.

4) Full transparency could also negatively impact the user’s privacy and reputation as everyone could access the whole blockchain

5) Smart contracts are vulnerable in some circumstances that might result in cyber-attacks because they cannot be modified.