In our previous blog we explained you what Blockchain tech is and how it works. In this blog, we will discuss the Merits & Limitations of Blockchain Technology.
Efficiency- As transactions are settled directly between relevant parties with no intermediary and with digitized information, settling transaction is real quick. Added to this is the ability to operate “smart contract” which trigger commercial actions based on fulfillment of criteria laid out in the contract. This can dramatically streamline processes and do so, reduce time and cost.
Quality Assurance- If an irregularity is detected somewhere along the supply chain, a blockchain system can lead you all the way of its point of origin. This makes it easier for business to carry out audits, investigation and execute the necessary actions.
Traceability- Tracking goods in a supply chain can be advantageous when seeking to trace where components are currently residing.
Transparency- One of the prime reasons blockchain is intriguing to business is that this technology is largely open source. That means other users or developers have the opportunity to modify it as they see fit. But the most important advantage is; it makes altering logged data within a block chain impossible.
Security- As each transaction is verified within the network using independently verified complex cryptography, the authenticity of the information can be assured. Assured information is one of the fundamental keys to unlocking the benefit of the internet of things. Which is closed loop cyber autonomous process linking assets to action.
Faster transaction- When it comes to traditional banks, it’s not uncommon for transaction to take days to completely settle. This is due to protocols in bank transferring software as well as the fact that financial institutions are only open during normal business hours, five days a week. Comparatively, blockchain technology working 24 hours a day, seven days a week, meaning blockchain based transaction process considerably more quickly.
Reduced transaction cost: As noted, blockchain allows peer-to-peer and business-to-business transaction to be completed without the need for a third party, which is often a bank. Since there’s no middleman involvement tied to blockchain transaction, it means they can actually reduce cost to the user.
Trustworthy system: Data structure build using blockchain allows making and verifying transaction without a third party involvement. This strongly reduces the risk of a backdoor transaction and unauthorized invention. Modification of historical data is only possibility of data tampering and creates a robust system.
Cost- Blockchain offers tremendous saving in transaction cost and time but the high initial capital cost could be a deterrent for businesses.
Control, security and privacy- While solutions exist including private or permission blockchain and strong encryption, there are still cyber security concern that needs to be addressed before the general public will entrust their personal data to a blockchain solution.
Large energy consumption- The bitcoin blockchain network miners are attempting 450 trillion solutions per second in effort to validate transaction, using substantial amounts of computer power.
Uncertain Regulatory Status- Because modern currencies have always been created and regulated by nation by national governments, blockchain and bitcoin face a hurdle is widespread adoption by pre-existing financial institution of its government regulation status remain unsettled.