Advantages And Disadvantages Of Blockchain Technology
Veera Budhi works as a Chief Technology Officer (CTO) at Membrane Labs.
A blockchain is a network of decentralized and distributed data (ledger), meaning the users share the ownership and management of the network through computer nodes. As a database, blockchain stores information in a digital format.
Blockchain technology stores data in blocks and link them together to form a chain. The blocks have a specific capacity and, when filled, are closed and linked to the previous block. Any newly added information after the last block is compiled into a newly formed block and added to the chain once filled.
Blockchain is famous for its critical role in cryptocurrency systems like Bitcoin. It maintains a decentralized and secure record of crypto transactions. Therefore, blockchain can guarantee the fidelity and security of data records and generate the need for a third party.
Advantages Of Blockchain Over Non-Blockchain Database
• Immutability. Blockchain supports immutability, meaning it is impossible to erase or replace recorded data. Therefore, the blockchain prevents data tampering within the network.
Traditional data do not exhibit immutability. The conventional database uses CRUD (create, read, update and delete) at the primary level to ensure proper application operation, and the CRUD model enables easy erasing and replacing of data. Such data can be prone to manipulation by rogue administrators or third-party hacks.
• Transparency. Blockchain is decentralized, meaning any network member can verify data recorded into the blockchain. Therefore, the public can trust the network.
On the other hand, a traditional database is centralized and does not support transparency. Users cannot verify information whenever they want, and the administration makes a selected set of data public. Still, however, individuals cannot verify the data.
• Censorship. Blockchain technology is free from censorship since it does not have control of any single party. Therefore, no single authority (including governments) can interrupt the operation of the network.
Meanwhile, traditional databases have central authorities regulating the operation of the network, and the authority can exercise censorship. For instance, banks can suspend users’ accounts.
• Traceability. Blockchain creates an irreversible audit trail, allowing easy tracing of changes on the network.
The traditional database is neither transparent nor immutable; hence, no permanent trail is guaranteed.
Disadvantages Of Blockchain
• Speed and performance. Blockchain is considerably slower than the traditional database because blockchain technology carries out more operations. First, it performs signature verification, which involves signing transactions cryptographically. Blockchain also relies on a consensus mechanism to validate transactions. Some consensus mechanisms, such as proof of work, have a low transaction throughput. Finally, there is redundancy, where the network requires each node to play a crucial role in verifying and storing each transaction.
• High implementation cost. Blockchain is costlier compared to a traditional database. Additionally, businesses need proper planning and execution to integrate blockchain into their process.
• Data modification. Blockchain technology does not allow easy modification of data once recorded, and it requires rewriting the codes in all of the blocks, which is time-consuming and expensive. The downside of this feature is that it is hard to correct a mistake or make any necessary adjustments.
One solution doesn’t fit all requirements, and this is the same with blockchain technology. There is a lot of buzz in the industry about blockchain and Web3, and many organizations are looking to move from Web 2.0 to Web3, but this is not a straightforward “lift-and-shift” type of solution. Organizations should do their due diligence and conduct a deep dive analysis to see if the blockchain technology fits their needs and then plan the development or migration to Web3 accordingly.
Source : forbes.com
