What is Blockchain Technology?
If you have been following cryptocurrency, interesting, or banking over the past decade then chances are high that you have heard the term blockchain.
Blockchain is the record-keeping tech which is behind the famous network of Bitcoin.
At first glance, Bitcoin may seem complicated to you but the central concept of this technology is very simple to understand.
Basically, blockchain is a kind of database. To fully understand the blockchain concept in depth, let’s understand first what is a database.
A database is a collection of data and information which is stored electronically on your PC.
Data or information that is stored in the database is typically structured in table format for allowing for easy filtering and searching for specific data or information.
Now, you may ask that what is the prime difference between someone who is using a database to store information or data rather than a spreadsheet?
Spreadsheets of built and designed for a small group of people, or for a single person for accessing and storing a limited amount of data or information.
On the other hand, a database is built or designed for housing a significantly huge amount of data or information which can be manipulated, filtered, or accessed at a faster rate and easily by n number of users simultaneously.
Big databases accomplish this by storing information or data some of which are made of powerful and strong computer systems.
Such a service can sometimes be designed and built using hundreds and thousands of computer systems in order to have the storage capacity and computational power that is required for many users and persons for accessing the database at a single time.
While a database or a spreadsheet may be accessible to n number of people at a single time, it is often managed and owned by a business and appointed individual who has control complete control over it and how the data within it is controlled and accessed.
So now the question arises how does a database differ from a blockchain?
A system of recording data or information in such a way that makes it extremely difficult or maybe impossible for cheating, hacking, or changing the system is known as the blockchain.
Blockchain can be termed as a digital ledger of transactions that is distributed and duplicated across the entire network of computers on blockchain technology.
Each block in a blockchain consists of a number of transactions and every single time a new transaction is made on the blockchain, a record of such transaction is added to the ledger of a participant.
The decentralized database is handled by many different participants which is known as DLT which is distributed ledger Technology.
Blockchain can be termed as a kind of DLT in which transactions are recorded with a cryptographic signature which is known as a hash.
This essentially means that if a single block in one block was changed, then it will be immediately evident that it has been tampered with.
Hackers who wish to corrupt a complete system of blockchain, have to change every single block in the chain across all of the distributed versions of the blockchain.
Blockchains like Ethereum and Bitcoin is continuously and constantly growing as blocks are being added to the chain.
This adds significantly to the ledger’s security.
History and Evolution of Blockchain
Year 1991 to 2008 – Scott Stornetta and Stuart Haber worked on the first blockchain ever in this period.
Year 2009 – Santoshi Nakamoto released the white paper on Bitcoin.
Year 2010 – The first ever Bitcoin purchased 10,000 BTC took place.
Year 2013 – The Marketplace of Bitcoin surpasses 1 billion US dollars. Vitalik Buterin released the 1st White Paper of Ethereum.
Year 2014 –The blockchain of Ethereum is funded by crowd sale.
The technology R3 of Blockchain is formed and this leads to the formation of more than forty legacies financial to implement blockchain technology.
The NEO project is started by Erik Zhang and Da Hongfei.
Year 2015 – 2nd Blockchain of Ethereum is unveiled. Linux unveils Hyperledger for enhancing the development of Blockchain.
Year 2017 –EOS.IO is revealed by block. one as a new protocol of blockchain for the successful deployment of decentralized apps.
Year 2015 – The year 2018 –Blockchain Technology is evolved by an ever-increasing number of cryptocurrencies and companies leveraging this tech for enhancing efficiency.
The architecture of blockchain is heavily used in the financial industry.
However, nowadays blockchain technology helps build and create software development solutions for smart contracts, digital notaries, recordkeeping, and cryptocurrency.
The traditional architecture of WWW uses a client-server network. In such a case, the server keeps all the needed data or information in a single place, so this is extremely easy for updating due to the server being a database that is centralized and controlled by a number of administrators with permissions.
Each participant within the network updates approves and maintains new entries in the case of the distributed network of blockchain architecture.
The entire system is controlled not only by separate people but by everyone who is within the network of blockchain.
Each and every member ensures that all the procedures and records are in order which results in data security and validity.
Therefore, parties which do not necessarily trust each other will be able for reaching a common consensus.
For summarising things, a blockchain is a type of distributed and decentralized ledger of different types of transactions that are arranged into a p2p network.
This network contains several computer systems but in a way that the information cannot be changed without the consensus of the entire network, that is each separate computer system.
The structure of the blockchain is represented by a list of several blocks with transactions in a specific order.
These lists can be stored as a text file or in the form of a normal database.
2 important data structures used in the blockchain are –
- Pointers – Pointers are the variables that keep data about the location of another variable. Particularly, this is pointing to the position of another variable.
- Linked Lists – Linked lists are a block sequence where each block links to the following block with the help of a pointer and has specific data.
If we go by logic, the 1st block doesn’t consist of the pointer, since this one is the 1st in a chain.
How Does A Blockchain Work?
In the past few years, you might have seen that there are many businesses that are opting for Black blockchain Technology.
But do you know how blockchain technology actually works? Is this a simple addition or a significant change?
The advancement of blockchain technology has the potential to be revolutionary in the future space and is still young.
So, let’s begin demystifying blockchain technology.
It is a combination of three leading technologies –
- Cryptographic keys
- A means of computing for storing the transactions and records of the blockchain network
- A peer-to-peer network consisting of a shared ledger
Cryptography keys contain 2 keys – a public key and private key.
Both these keys are helpful in performing successful transactions between any two parties.
Each person has these two keys which they used for producing a secure and digital identity reference.
This secured identity is the most crucial expect of this technology which is known by the name of blockchain.
In the cryptocurrency world, this identity is known as a digital signature and is used for controlling and authorizing transactions.
The digital signature is combined with a peer-to-peer network, and a huge number of people who act as authorities use this digital signature for reaching a consensus on transactions among various other problems.
When they authorize a deal, it is certified by a verification that is mathematical and results in a successful and secured transaction between the two parties.
So for summing it up, the users of blockchain employ cryptographic keys for performing different types of transactions and interactions which are digital over the peer-to-peer network.
The Transaction Process
One of the features of blockchain Technology is the way it authorizes and confirms transactions.
For instance, if two people want to perform a transaction with the public and private keys, then the first party would attach the transaction data to the public key of the second party.
The complete information is gathered together inside a block.
A block consists of the relevant information time spent and a digital signature.
You should note that the block does not include the identity of the people who are involved in the transaction.
The block is then transmitted across all the nodes of the network and when the correct person uses his or her private key and matches it with the respective block, the transaction is completed successfully.
Also, for conducting financial transactions, blockchain technology can also hold the details of vehicles and properties.
The following case will clearly illustrate how blockchain technology works –
Blockchain uses hash encryption for securing the information relying mainly on the SHA256 algorithm for securing the information.
The address of the public key, the address of the receiver of the transaction, and his or her private key details are transmitted through the SHA256algo.
The encrypted data which is also known as hash encryption is added to the blockchain after verification and is transmitted across the globe.
The SHA256 algorithm makes it almost impossible for hacking the hash encryption which in turn simplifies the authentication of the receiver and the sender.
Proof of Work
Each block contains four main headers in a blockchain.
- Previous Hash – Previous hash address locates the previous block.
- Details of Transaction – The Transaction details of the transaction which is going to occur.
- Nonce – Nonce is an arbitrary number that is given to differentiate the hash address of the block in cryptography.
- Hash Address of the Block –All the above-mentioned (Nonce, Transaction Details, and Preceding Hash) are transmitted via a hash algorithm This provides an output consisting of a 64-character, 256-bit length value, which is known as the unique hash address. Eventually, it is known as the hash of the block.
- Many individuals across the globe are trying to figure out the correct hash value for meeting a pre-determined condition using algorithms which is computational. The transaction gets finished when the predetermined condition is fulfilled. In layman’s language, the miners of blockchain attempt to solve a puzzle that is mathematical and is known as a proof of work problem. Whoever solves this proof of work problem first, gets rewarded.
The process of adding details of the transaction to the present public or digital ledger in blockchain technology is known as mining.
Although this term is associated with the famous Bitcoin, it is used for referring to other blockchain Technologies as well.
Mining includes generating the hash of transactions of a block which is very tough for forging, thus ensuring the safety of the complete blockchain system without the requirement of a central system.
Types of Blockchain
There are typically two kinds of blockchain – public blockchain and private blockchain.
However, there are various variations such as hybrid blockchain and consortium blockchain.
Before we get into the details of these kinds of blockchains, let us know what are the similarities of these blockchains.
Each blockchain contains a cluster of notes functioning on a peer-to-peer network system.
Each node in a network has a copy of the ledger that is updated on a timely basis.
Eid notes can create blocks, receive or initiate transactions, and verify transactions.
Now let’s deep dive into the four types of blockchain that are possible.
All blockchain architectures are categorized into the following four categories –
1 Public Blockchain Architecture
A public blockchain architecture implies that access to the system and information is available to anyone who is willing to participate.
For instance – Litecoin, Ethereum, and Bitcoin blockchain systems are public.
A public blockchain is a permissionless, non-restrictive distributed ledger system.
Any individual who has access to the world wide web can sign in on a blockchain platform for becoming a part of the blockchain network and an authorized node.
A user or node that is part of a block public blockchain is authorized for doing proof of work for an incoming block, doing mining, verifying transactions, and assessing past and current records.
The most basic use of this type of blockchain is in exchanging and mining cryptocurrencies.
Therefore the most common public blockchains are Litecoin blockchain and Bitcoin blockchain.
Public blockchains are most secure if the individuals strictly abide by the security methods and rules.
However, it is risky when the users do not follow the security protocols very sincerely.
Examples –Litecoin, Ethereum, and Bitcoin.
2 Private Blockchain Architecture
On the other hand, the private blockchain architecture is controlled only by users from a particular organization or authorized people who have an invitation to participation.
A private blockchain is a permission or restrictive blockchain that is operated only in a closed network.
Private blockchain are typically used within an enterprise’s on an organisation where only the selected usersare the participants of the network.
The level of accessibility, permissions, authorisations and security is in the hands of the controlling institution.
Therefore, private blockchain are similar in use as a public blockchain, however they have a restrictive and small network.
These type of blockchain networks are deployed for asset ownership, digital identity, supply chain management and for voting.
Examples are Corda,Hyperledger and Multi-chain projects such as Sawtooth and Fabric.
3 Consortium Blockchain Architecture
Consortium blockchain architecture contains few organisation. In a consortium, blockchain architecture procedures are controlled and set up by the preliminary assigned users.
This type of blockchain is a semi decentralized kind of blockchain where more than a single organisation manages a network of blockchain.
This is contrary to what we have witnessed in the private blockchain, that is managed by one organisation.
More than a single organisation can act as a node in this kind of blockchain and do Mining or exchange information or data.
Consortium blockchain jobs are generally used by government institutions or banks.
Examples are R3 and Energy Web Foundation, etc.
4 Hybrid Blockchain
Hybrid blockchain is a combination of a public blockchain and a private blockchain.
It uses the features of both these kinds of blockchain which can have up public permission less system as well as a private permission-based system.
Individuals can control who gets access to which information stored in the network of the blockchain with this kind of hybrid network.
Only a selected section of records or data from the blockchain can be allowed for going public keeping the rest as private in the network.
The hybrid blockchain is flexible so that individuals can join a private blockchain with many public blockchain.
A transaction in a public network of this type of blockchain is typically verified within the network.
But different users can also release it in the public blockchain for getting verified.
The public blockchain involves more nodes for verification and increases the hashing.
This enhances the transparency and security of the network of the blockchain.
As mentioned above, blockchain is a distributed general where all parties have a copy that is local but based on the kind of structure of the blockchain and its context, the system can be more decentralized or centralised.
This simply means blockchain architecture design and who controls the ledger.
A private blockchain architecture is considered to be more centralised because it is controlled by a specific group withincreased privacy.
On the other hand, a public blockchain architecture is considered to be decentralized as it is open ended.
In a public blockchain architecture anyone can take part in the agreement process and all records are visible to the public.
On the other hand, this system is less efficient and effective because it takes lot of time for accepting each new record into the architecture of a blockchain.
If we talk about efficiency, the period for each transaction in a public blockchain architecture is less eco-friendly this is because it requires massive amount of computation power as compared to private blockchain.
Major Blockchain Platforms
1 IOTA Blockchain Platform
Iota is easily one of the most exciting block change environment in the market today, despite being one of the youngest.
IOTA took to the landscape of the blockchain with the mission for fundamentally changing the way that individuals assess distributed ledger technology.
The result is a more secure atmosphere to exchange information and values without fees.
Interestingly, it doesn’t actually use any blocks or chains, and is rather powered by its own and unique tech.
It offer leverage the power of internet of things for improved decision making and business.
There is also a central atmosphere for managing and upgrading your information.
Teams can use iota for the development of entire smart cities and for the creation of digital twins and anything in between.
All such thing and you get the advantages of being able for adding more privacy and security to your landscape.
Quorum is another Contender on this list and is an enterprise grade version of the Ethereum platform.
It is a JP Morgan creation. Specifically, it modifies the core of the structure of Ethereum for offering something more efficient and speedier for permissioning.
It is excellent to handle apps which require a lot of processing speed.
It is also the ideal option for any person who is looking for managing private transactions.
What’s more, it come with a development landscape and a full support service which is excellent for customisation.
A public blockchain platform which is developed CoinPrism is known as OpenChain.
It is a powerful environment that help institution design fantastic system for experimentation.
Any individual can spin up a new instance of blockchain on this environment within few seconds.
Also, users can exchange values on the ledger as per the rules laid and identified by the admins of the blockchain.
Just like cryptocurrency such as Bitcoin, you will be able for tracking every transaction that is taking place using your ledger.
Since there is zero miner in this environment, the transactions do not come with every price to worry about either.
4 Hyperledger Sawtooth
It is a blockchain that offers made available from the Linux Foundation both IBM and digital asset contributed some technology to the Hyperledger Sawtooth environment.
It is a modular enterprise-grade platform where experts can execute deploy and create distributed ledger.
It is easy for enabling digital records without central authorities in this landscape.
It offers lots of opportunities for extending your functionality and integrates with trusted execution environment.
The modular architecture separates the ecosystem from the application domain, so any individual can use smart contracts for specifying the rules for specific and particular apps without having to completely understand the full centre core system design and build.
EOS was launched in the year of 2008 and can be termed as a relative newcomer in the blockchain scenario.
It has firmly asserted itself in the blockchain his space despite its infancy.
EOS is designed and built by a private organisation which is known as Block.one and it is intended to develop decentralized apps for business.
Originally, this company distributed a billion tokens for EOS for ensuring that its cryptocurrency would spread across the globe.
Now any individual can EOS for creating customisable environments.
EOS provides an excellent solution for decentralized app hosting.
Another benefit of this environment is that it removes any fees for its users. You do not need to pay any fees for making the most of EOS.
This blockchain platform is all about supporting digital transformation and providing blockchain services and custom blockchain development options to businesses across the globe.
Institutions can design revolutionary business tools which support the management of digital assets with this unique environment.
Another benefit that you will reap after using this blockchain platform is that there are plenty of customisable permission options for your peace of mind.
Thanks to services that include a team of dedicated professionals of blockchain, this blockchain platform can help any individual get started with blockchain for.
Specifically, these specialists will help you work with some of the leading blockchain platforms across the globe.
An open-source blockchain environment that help businesses to create more private and Secure transaction experiences is R3’sCorda.
It doesn’t have its own cryptocurrency like other blockchain platforms and environments.
An individual can unlock a better privacy level for his or her team since Corda operates on a permissioned model.
It also takes advantage from a granular level of control over digital records.
Corda is perfect for the financial sector, but it also supports trade authorities, healthcare and the government.
It is a blockchain platform that focuses on the financial side of the digital revolution and was created in the year of 2012.
Ripple connect banks, payment providers, digital asset exchange and many more through a blockchain network.
You can build your own custom financial solution or create Global payments with this platform.
As you are reading this, over 300 organisations across the globe are deploying and creating financial assets within this blockchain platform.
There are solutions for sending rapid payments across various network, minimising liquidity expenses and many more.
Most individuals refer Ethereum as another form of cryptocurrency or as an alt-coin aside from Bitcoin.
Since 2013, this is a blockchain platform. It has offered developersan open-source distributed computing environment where they can reap all the advantages of blockchain.
Vitalk Buterin was responsible for designing this solution.
You can write codes using the Ethereum virtual machine runtime platform.
This could be just this service for you if you are interested in exploring smart contract options.
This is accessible from anywhere in the world but is a bit slower if we talk about its speed.
10 IBM Blockchain
Visionary organisations around the world are using IBM’s famous and amazing blockchain platform which offers more transparent and environment for operations of a company.
In turn, this company is leading the world of business into a new era of innovation and collaboration.
What’s more this company stays way ahead of the blockchain curve with its different division that only and only focuses on designing and building blockchain apps.
Companies and organisations can better redefine their business relationships through newfound collaboration, transparency, and trust with IBM blockchain.
1 Smart Contracts
This term was first used in the year of 1993 but recently it has become a buzzworthy term, all thanks to the 2013 release of the project of Ethereum.
The Ethereum Project is a decentralized platform which runs smart contracts : apps which run exactly as programmed without any possibility of third party interference, fraud, censorship, or downtime.
Smart contracts are self automated programs of computer system that can carry out the terms of any contract.
These are the financial security held in escrow by a network which is routed to its recipients on the basis of computer code and future events.
Businesses will be using smart contracts for bypassing regulations and lowering the prices for a subset of the most common financial transactions.
The best advantage of smart contracts is that they will be unbreakable.
Organisations such as Slock which is an Ethereum enabled IoT platform uses smart contracts app for allowing its consumers for renting bicycles where they can unlock a smart lock after both the parties agreed on the terms mentioned in the contract.
2 Cloud Storage
Another application that businesses can reap benefits from each cloud storage.
Storj, is UK company that is offering secure cloud storage while decreasing dependency.
Users can simply store the traditional cloud 300 times over by using excess hard drive space.
If we consider that the globe spends more than 22 billion US dollars on cloud storage alone, this can possibly open a revenues stream for average individuals, while significantly dropping the prices for storing data for personal users and companies.
3 Proof-Of-Provenance and Supply-Chain Communications
Majority of the things that we purchased are not made by a single entity, rather than it is a chain of suppliers who sell their components to an organisation which markets and assembles the final product.
The issue with this system is that if a single component fails then the entire brand has to take the brunt of the complete backlash.
Using this technology will offer audit-able and digitally permanent records that shows stakeholders the state of the item at each value added step.
SkuChain and Provenance are 2 organisations attempting to address this problem
4 Paying Employees
It makes sense when blockchain is used as an application for compensating employees as it has its roots in cryptocurrency.
If an organization regularly pays wages to International workers, then incorporating blockchain into the payroll process of an organization can be a major price saver for the institution.
The first global Bitcoin-based payroll service is Bitwage.
This institution will circumvent the fees which are associated with transferring money internationally.
Payments made through Bitcoin will save both time and money for employees and employers in the same way.
Also, each and every individual can actually witness where the cash is flowing throughout the process.
Now comes the case of paying to remote contractors and employees.
This is a type of payment that many big corporations are betting on this year and is a very part of personal business.
5 Electronic Voting
DPOS which means delegated proof of stake is the most flexible, most decentralized, most efficient, and fastest consensus model available.
It leverages the stakeholder power for resolving consensus problems in a democratic and fair way.
All parameters of network ranging from transaction sizes to intervals of blocks can be tuned via elected delegates.
The selection of producers of the block allows transactions to be confirmed in just a matter of time.
The consensus protocol has been designed for protecting all the participants against unwanted regulatory interference.
Blockchain’s future will be ever-expanding in the coming years.
Main Barriers to Blockchain Adoption
1 Inefficient Technological Design
One of the major barriers to implementing blockchain is its inefficient technological design.
A loophole and a coding flaw is one of the important points in this.
Bitcoin was the flag bearer in this regard and Ethereum really tried to cover up all the disadvantages of Bitcoin, however, it is not still enough.
For instance, let’s take decentralized application development.
Ethereum allows the developers for implementing the dApps on the basis of their system and to date there are plenty of dApps based on it.
However, many of them seem to have only a matter of loopholes and false coding.
Hackers can take advantage of these loopholes and can hack into the system at a faster rate.
So if you talk about security it isn’t working very properly here.
Things will surely become more comfortable if we can fix this blockchain adoption challenge.
2 The Criminal Challenge
The anonymous feature of blockchain attracted both criminal personnel and experts.
This is because of the decentralized nature of the network can know your true identity.
This makes Bitcoin and blockchain the main targets which can be used as a currency in the dark web and the black market.
Now is a good time to build up a reputation as it is natural for individuals to stay from the associations of any criminal.
Criminals can utilize these cryptocurrencies for the purchasing of payment methods and Limited illegal equipment.
They can also use the cryptocurrencies in exchange as a ransom.
The only method for coping up with challenges to stop the connections of the criminals and all for better implementation of blockchain.
3 Low Scalability
If we talk about real life then blockchain works fine only for small amount of people.
Bitcoin and Ethereum now have the largest number of people on their Network and they are having a very difficult time handling the situation.
The transactions take longer time to process in the usual number increases on the network.
As a result, this restricts more users on the network and the cost of the transaction are higher than usual.
It can even take weeks for processing the complete transaction.
So, this challenge of blockchain adoption is making this technology less lucrative.
Few Technologies of blockchain also showed a faster output but they slowed down when a large number of people logged into the system.
So, this adoption challenge of blockchain needs to be addressed very soon as it is making blockchain appear a kind of dull.
4 High Energy Consumption
It is another barrier to the adoption of the blockchain as the majority of the blockchain technology follow proof of work and follow the infrastructure of Bitcoin as a consensus algorithm.
However everything is not as great as it seems because you will need computational power for keeping the system live.
Mining will require you for solving Complex equations using your personal computer system.
Therefore your computer will consume more and more electricity for overcoming this situation when you start the mining process.
Minors are currently consuming 0.2 % of the total electricity.
Miners will take more power than the world can provide if it keeps increasing.
Therefore it has now become one of the major challenges to this network.
Main Institutions are trying to avoid this technology just for the sake of this challenge.
This situation needs to be brought under control, but how?
Blockchain can use other methods of consensus for validating the transitions full stop the algorithms of consensus which require very little power for processing.
It is the only way we can make this technology a blessing again.
Future of Blockchain
- Pragmatic Governance Models will emerge
In the year of 2021 we will see new governance model that enable diverse and large consortia for approaching permissioningschemes, decision making and even payments more efficiently.
These models will help for standardizing information from various sources and for capturing more and new robust data sets.
68% of CIOs and CTOs even expect for seeing a scalable governance model for interactions across various blockchain networks to be a vital feature of the blockchain of their organisation in the next one to three years.
2 Interconnectivity comes a step closer to reality
Though the definition of interoperability can take many forms and reaching interconnectivity at the maximized level might be years away, we find that it is 50% of organisations today believe Assurance of standard and governance which allow and profitability and interconnectivity among permission less and permissioned blockchain networks to be a vital part for joining and industry wide blockchain network, with more than 20% believe it to be crucial.
Although there is still work to be done on this front, 2021 as more emerging networks attain Critical Mass will find that more members of one network will expect guidance on integration between several different protocols.
3 Adjacent technologies will combine with blockchain technology for creating a next level advantage
If we combine adjacent Technologies with blockchain that will help us to do things that haven’t been done before in this world.
More trustworthy information from the blockchain will strengthen and inform underlying algorithms.
Blockchain Technology will help keep the information secure and Audit each step in the process of decision making enabling sharper insights driven by information that network participant trust.
4 Validation tools will begin for combating fraudulent data sources
Blockchain solutions will use validation tools along with Oracles, IoT beacons, crypto-anchors and mechanisms that link digital assets to the physical world by injecting outside information internet works with the need for heightened data protection mechanism.
This will remove the dependency on human data entry and improve trust which is often prone to fraud and error.
5 Central Banks will expand into retail and wholesale CBDCs i.e. Central Bank Digital Currencies
The Caribbean and the Middle East with the Nations in Asia are beginning to experiment with CBDs in real time as there is no doubt that they will continue for gaining Momentum in the next few years and redefining payment in various ways.
For once we will continue expansion in the wholesale CBDCs with some initial forays in retail CBDCs.
Moreover, you can also find that there will be an increased interest in digitisation and tokenization of other types of securities and assets like Central Bond debentures for treasury Bond.
Limitations of Blockchain
- It is not a distributed computing system
Blockchain is a network that completely depends on notes to function properly.
The quality of the nodes will determine the blockchain quality.
For instance the blockchain of Bitcoin is a strong and incentivizes the nodes for participation in the network, but the same is not true for a blockchain network that do not incentivize the nodes.
This means that it is not a distributed computing system where the network do not depend on the participation and involvement of the nodes.
In comparison a distributed computing system works for ensuring that they verify the transactions according to the protocols, make sure that they record all the transactions.
These action are similar to that of a blockchain but there is lack of paralleling, mutual assistance and Synergy for each one of them.
Clearly, blockchain lacks the feature that make a distributed computing system so advantageous of the organisations.
2 Scalability is an issue
Blockchain are notscalable if we compare them to their counterpart centralised system.
You would know that the transactions are completely dependent on the network congestion if you have used the Bitcoin network.
This issue is related to scalability with blockchain networks. In simple words, the more number of nodes or people who join the network, the more chances of slowing down.
3 Some Solutions of Blockchain Consume Way Too Much Energy
The technology of blockchain was introduced with Bitcoin and it uses the proof of work congestion algorithm which rely on the miners to do all the hard work.
The miners are incentivized for solving Complex mathematical problems.
The consumption of energy is what makes these mathematical problems not so ideal for the world in which we live in.
4 Data Is Immutable – The Blockchain cannoy go back
It has always been one of the biggest disadvantage and limitations of the blockchain.
It is very clear that multiple systems take advantage of it including financial systems and supply chains.
But if we take how networks work, we should also understand that the immutability of data can only be present if the nodes of the network are distributed fairly.
What I mean to say here is that a network of a blockchain can be controlled by an entity if he or she owns more than half of the nodes – making it vulnerable.
Another issue that it faces is the information or data once written cannot be removed.
We all know that every individual who is living on this planet has his or her right to privacy.
However, if the same individual uses a digital platform that runs on the technology of blockchain, then he or she will be unable to remove its trace from the system when he or she does not want it there.
There is no way, in simpler words, he or she can remove his or her trace, leaving rights to privacy in pieces.
5 Blockchain are inefficient, sometimes
There are many Technologies of blockchain out there right now and if you pick up the most famous ones including the blockchain technology which is used to buy Bitcoin, then you will find a lot of issues and inefficiencies within its system and it is one of the biggest disadvantages and limitations of blockchain right now.
For example when I set up Bitcoin Miner on my system, then I found out that the ledger can easily cross hundreds of GB.
It was not data storage efficient which can lead to problems of Storage for multiple nodes who want to become part of the network.
Clearly, there can be a better way of handling this, whenever the information is updated and the nodes need to replicate it.