The Potential of the Blockchain
By Blokkx Ltd. on Altcoin Academy
Blokkx Ltd. November 2019
Five Advantages and Disadvantages of Blockchain Technology
Blockchain is one of the most hyped topics in IT and business. The technology offers many advantages, but also some disadvantages that companies should consider. We show the 5 most important advantages and disadvantages of the Blockchain.
The blockchain technology offers more data protection and higher effectiveness, but at the same time brings more complexity and inappropriate structures.
The blockchain technology offers more data protection and higher effectiveness but also brings more complexity and inappropriate structures.
Advantage 1: More Data Protection, Security, and Transparency
Due to the basic function of the Blockchain, all data is stored encrypted and is more securely available than with conventional technologies. Since all actions are stored in the Blockchain, you can see exactly when and which actions were performed. The individual blocks build on each other, so manipulation is much more complicated than before. The general operation by users is simpler so that users can quickly use the technology as soon as there are enough areas of application.
Advantage 2: No Central Structure Necessary
An important basis of the Blockchain is that there is no central server on which all data is stored, but that all members of the blockchain store all data. This increases security and dependency on a central server. The Blockchain network, therefore, protects itself through its members.
Advantage 3: Many Fields of Application for Companies and Authorities
The first two advantages result in many fields of application for companies and authorities. As soon as data has to be passed on, for example in medicine, logistics or finance, the Blockchain can help to carry out a data transfer quickly and securely. Authentications also become more plausible, so that even the first countries plan to create a badge based on the Blockchain. This fact enables the fast provision of a security badge. The Blockchain also makes sense in logistics, since Smart Contracts keep the flow of goods entirely under control. There is an almost inexhaustible list of application areas for the decentralized, fast, secure, transparent and traceable transfer of data in companies.
Advantage 4: Higher Speed and Better Traceability
The Blockchain enables you to increase the speed with which processes can be handled in the company. At the same time, the individual data can be better tracked if the data storage in the Blockchain is transparent. This is particularly advantageous in logistics because the particular data can be traced at any time. The Blockchain helps to carry out and manage data flow. Hardly any other technology currently offers this, especially not via decentralized data storage.
Advantage 5: Cost Reduction
Of course, companies and authorities also hope to reduce costs by using Blockchain. As own servers are no longer required and the data can be passed on within the Blockchain faster and easier than before, costs can be significantly reduced. The security is also cheaper because the data is encrypted, and the Blockchain can protect itself through the logical structure. Company processes become faster and more effective.
Disadvantage 1: Hardly Realistic Application Areas
Even if the Blockchain has enormous potential, there are currently hardly any implementable and productive uses of the Blockchain for the majority of companies. There are many approaches to use Blockchain, but since the technology is still relatively new for companies, they are neither mature nor permanently in practice in use. Therefore, it has to be carefully checked whether the intended blockchain application in the company is also suitable for the future. Currently, the Blockchain is often regarded as the savior for all IT requirements. Only the future will show in which areas of IT the Blockchain makes sense and where other technologies are better suited.
Disadvantage 2: Complex Implementations and New Technologies
Blockchain is a complex technology. To implement it, IT in the company becomes much more complex, and new servers, programs, and development environments are necessary. These are constantly changing, and new approaches, solutions, and tools are regularly emerging. Many large cloud providers already provide central cloud solutions for the Blockchain. These have to be understood, managed and, above all, distributed throughout the company. More complex networks and new technologies in the system pose new challenges for the IT department but also other users in the company.
Disadvantage 3: New, Still Relatively Unknown Technology
Blockchain technology is mostly unknown, at least in many areas. It is not yet clear what the security challenges will be as technology advances in other areas. The Blockchain became known mainly through the cryptocurrency BitCoin. Here it has been shown that it is possible to stand, falsify and manipulate data despite all security. This can quickly lead to problems in networks with their blockchains. At present, it is not yet possible to estimate where the Blockchain will prevail and how the technology will affect the network and the Internet.
Disadvantage 4: Increasing, Distributed Data Volume, and Storage Challenges
The blockchain data is not stored centrally, but on the individual nodes in the blockchain network. In the future, the question will be where this data will be stored and with which technology. If users do not work with their own workstations, but with virtual desktops on a few servers, the data is also stored on the servers. But this contradicts the use of Blockchain.
Since IT is evolving in the same way as the Blockchain, and it is currently more likely that the user’s clients will be centralized, this can be a problem with the decentralization approach of the Blockchain, which must be taken into account during implementation. In any case, there are challenges that need to be addressed.
Disadvantage 5: Few Specialists Available
There are currently a few specialists who are able to develop applications for the Blockchain and manage the associated infrastructure. Since the Blockchain will certainly spread in the future, it can be assumed that there will also be a lack of specialists in the future. This fact is of course particularly problematic in a new area of IT, where experts are particularly needed to solve challenges, help users and further develop the Blockchain in their own companies.
The Blockchain has enormous potential. It is clear that technology will play a significant role in the future, especially in logistics, healthcare, and finance. However, it is not yet clear which specific applications will be used and how they will be implemented in the company. The experts with whom the Blockchain is to be implemented in the company are also still scarce at present.