Advantages and disadvantages of Blockchain

Blockchain technology has been presented as a disruptive technology that offers, mainly, security levels never seen before, necessary, and desired not only by the IT or finance industry but, in general, for any type of Industry, which makes it an incredibly versatile technology.

However, despite its broad benefits, Blockchain technology is far from perfect and presents, as any disruptive technology, advantages, and disadvantages in its implementation. Let’s look at some of them.

Advantages of Blockchain

Decentralization. This is the main feature of blockchain technology, and the strong point is that to authenticate transactions or operations no other instance is required to act as an intermediary, reducing transaction validation times.

Network distribution. This point provides, at the same time, several benefits since, by having this network distributed, in the first instance, no one owns the network, allowing different users to always have multiple copies of the same information.

Also, this characteristic makes it resistant and resilient to any type of failure since the fact that a node fails does not imply generalized failures in the network.

Likewise, having a distributed network means that there are practically no errors because the information must be verified by many participants in this network. Erroneous or malicious information within the blockchain becomes practically impossible.

Low costs for users. The decentralized nature of Blockchain, allows for the validation of person-to-person transactions quickly and securely. Eliminating the need for an intermediary reduces costs for users.

Disadvantages of Blockchain

High implementation costs. Just as this technology represents low costs for users, unfortunately, it also implies high implementation costs for companies, which delays its mass adoption and implementation.

Inefficiency. It is inefficient to have several network users validating the same operations, since only one will receive the reward derived from this mining process. This process, and for the same reason of many users doing the same thing, also implies a huge waste of energy, not very environmentally friendly technology.

Private keys. Excessive security can also be an Achilles heel, in the case of private keys, as has been documented on many occasions, having lost them it becomes almost impossible to recover these keys, causing a problem, mainly, for all those holders of cryptographic values.

Storage. As the number of users grows, the number of operations that will be integrated into the blocks to be stored will also grow, so the space required will also have to increase inside the miners’ computers, eventually exceeding the capacity of the hard disks.

Unemployment. The lack of need for intermediaries will cause that, as Blockchain technology is adopted and implemented, all these intermediation sectors for the validation of payments and processes will necessarily be reduced to the point of disappearing and, with it, the jobs required for it will disappear.

A two-edged sword

There are at least a couple of characteristics of the Blockchain network that represent both an advantage and a disadvantage potentially becoming a two-edged sword that plays both for and against the adoption and implementation of this technology on a massive scale.

Immutability of information. As mentioned before, blockchain technology is far from perfect, so it is not exempt from errors, and the fact that the information contained in the blocks is inviolable represents a major problem in the face of these possible errors, since this information cannot be changed.

Anonymity. although for most user’s anonymity is a virtue, derived from the trust they have in the Blockchain network for the validation of person-to-person transactions. This feature has also been exploited, even to commit illicit acts, since it makes it impossible to trace transactions.

It is a disruptive technology that is still in a process of constant transformation and adaptation, and therefore, during this development, it continues and will continue to present some challenges. It is important to be aware of these advantages and disadvantages before this trend of massive adoption of Blockchain technology.