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Aug 14, 2019

Benefits of blockchain

Decentralization: As a consensus mechanism is used to agree on the validity of transactions, there is no need for a trusted third party or intermediary to validate transactions.

Transparency and trust: Additionally, every node has a private copy of data on the blockchain, making the system transparent. As a result, the need to derive trust from a central entity is eliminated, thus decentralizing trust.

Immutability: As a consequence of decentralized storage and data integrity assured by cryptographic hashing, makes it is extremely difficult to change the data once it is finalized. This results in a permanent auditable ledger of transactions.

Benefits of Blockchain

High availability: As each node stores a copy of the blockchain locally, the networks functions even if some of the nodes are not available.

Simplification of current paradigms: In many industries, such as finance or health, multiple entities maintain their own databases, this makes it difficult to update and audit data. Blockchain solves the problem as it has a shared ledger stored in all the nodes of the network. Blockchain makes the process of auditing faster.

Cost saving: Because blockchain does not require a trusted third party or clearing house, overhead costs, such as fees paid to intermediaries, can be eliminated.

Limitaions of blockchain

The major disadvantages of blockchain technology are

complexity: blockchain is a rather new technology and there are so many technologies like cryptography, networking are involved in blockchain which makes it difficult to adapt.

size and storage: blockchain is a peer-to-peer network and the nodes are scattered all across the globe this makes them huge and hard to maintain. All the nodes in a blockchain store a copy of the database sometimes these databases can be huge and are difficult to store.

scalability: It is difficult to scale blockchains horizontally because different nodes on the network have different computing power.

regulation: Blockchain is a disruptive technology and has the ability to change traditional banking and monetary systems. So many countries and governments have laws that do not allow the use of blockchains in some forms or other.

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