Advantages and Disadvantages of Blockchain

Most blockchains are designed as a decentralized database that functions as a distributed digital ledger role. These blockchain ledgers record and store data in the form of blocks, which are organized chronologically and linked through cryptographic proofs. The birth of blockchain technology has brought many advantages to various industries and can provide higher security in a trustless environment. However, its decentralized nature also brings some disadvantages. For example, compared to traditional centralized databases, blockchain has limited efficiency and requires increased storage capacity.

Advantages

Distributed

Because blockchain data is typically stored on thousands of devices on a distributed network of nodes, the system and data are vulnerable to technical failures and malicious attacks. The resistance is very strong. Each network node is able to replicate and store a copy of the database, so there is no single point of failure, i.e. a single node going offline does not affect the availability or security of the network.

In contrast, many traditional databases rely on one or more servers and are more susceptible to technical failures and cyber attacks.

Stability

Confirmed blocks are unlikely to be revoked, which means that once the data is registered in the blockchain Hard to remove or change. This makes blockchain an excellent technology for storing financial records or any other data that requires an audit trail, as every change is tracked and permanently recorded on a distributed and public ledger.

For example, companies can use blockchain technology to prevent employee fraud. In this case, blockchain can provide a secure and stable record of all financial transactions that occur within a company. This will make it more difficult for employees to hide suspicious transactions.

Trustless system

In most traditional payment systems, transactions not only rely on the two parties involved in the transaction, but also rely on intermediaries , such as a bank, credit card company, or payment provider. With blockchain technology, there is no need for an intermediary because a distributed network of nodes verifies transactions through a process called mining. Therefore, blockchain is often called a "trustless" system.  

So the blockchain system eliminates the risk of trusting a single organization and also reduces overall costs and transaction fees by cutting out middle parties and third parties.

Disadvantages

51% Attack

The proof-of-work consensus algorithm used to secure the Bitcoin blockchain has proven to be highly effective over the years. However, blockchain networks can be susceptible to certain potential attacks, with the 51% attack being one of the most discussed. This attack could occur if a single entity managed to control more than 50% of the hashing power, ultimately allowing a malicious attacker to disrupt the network by deliberately excluding or modifying the order of transactions.

While theoretically possible, there has never been a successful 51% attack on the Bitcoin blockchain. As the size of the network increases, so does the security, and miners are less likely to devote large amounts of money and resources to attacking Bitcoin because the rewards for acting honestly are higher. In addition to this, a successful 51% attack can only modify recent transactions for a short period of time because blocks are linked via cryptographic proofs (changing earlier blocks would require an unimaginably large amount of computing power). Additionally, the Bitcoin blockchain is highly resilient and can quickly adapt to attacks.

Data modification

Another disadvantage of the blockchain system is that once the data is added to the blockchain, it is difficult to Revise. Although stability is one of the advantages of blockchain, stability is not always good. Changing blockchain data or code is often very demanding and generally requires a hard fork, where one chain is abandoned in favor of another.

Private key

Blockchain uses public key (or asymmetric key) cryptography to give users control over their cryptocurrency units ( or any other blockchain data). Each blockchain address has a corresponding private key. While the address can be shared, the private key should be kept secret. Users need a private key to access their funds, meaning they act as their own bank. If a user loses their private key, the money is effectively lost and there is nothing they can do about it.

Inefficiency

Blockchains, especially those using proof-of-work, are very inefficient. Since mining is highly competitive and there is only one winner every ten minutes, the efforts of all other miners are in vain. As miners continue to try to increase their computing power, they have a greater chance of finding a valid block hash. The resources used by the Bitcoin network have increased significantly over the past few years, and it currently consumes more energy than many countries such as Denmark, Ireland And Nigeria consumes even more.

Storage

Blockchain ledgers can grow very large over time. The Bitcoin blockchain currently requires approximately 200 GB of storage space. The current growth in blockchain size appears to be outpacing the growth of hard drives, and if the ledger becomes too large for individuals to download and store, the network risks losing nodes.

Summary

Although blockchain technology has shortcomings, it also has some unique advantages , it will inevitably continue to exist. We still have a long way to go in terms of mainstream adoption, but many industries are starting to take the pros and cons of blockchain systems seriously. In the coming years, businesses and governments are likely to experiment with new applications and explore where blockchain technology can add the most value.