Blockchain changes not only business processes. But also the very principle of interaction between companies. Through transparency in a decentralized environment, companies can increase trust with customers. They can track product quality “on the checkout”.
Blockchain offers solutions that were previously unavailable to organizations, despite the rapid development of technology. But this system, like any other, is not devoid of its own shortcomings. Let’s consider the main advantages and disadvantages of blockchain supply chain development services at Unicsoft.
There is no single point of failure
Distributed ledger technology is designed so that the system is supported by many network nodes. In order to completely destroy the database or shut down the network, it is necessary to disable all nodes. If at least one or two nodes continue to work. Hacking is further complicated by the fact that it is not clear which nodes are supporting the network. Since such information is not stored on the blockchain.
Security and anonymity
Although blockchain transactions are visible to all users, they do not know who is hiding behind them. In centralized banking systems, it is possible to gain access to client accounts and transactions by hacking into a company’s server. But the blockchain system is protected from this, and it is almost impossible to get access to even one account if the cybercriminal does not pick up the private key from the wallet or the seed phrase. Keys and mnemonic passwords (seeds) are protected by 256-bit encryption. So even a supercomputer will take several years to find a password to a crypto wallet using the brute force method.
Improving the accuracy of information verification
When working with data, the human factor is included. So the system will not be immune from errors. Autonomous system blockchain transaction confirmation will enhance data authenticity.
Elimination of intermediaries
By eliminating intermediaries in the exchange chain, companies can significantly reduce costs and increase business efficiency. Since automatic transactions using, for example, a smart contract are much faster.
Blockchain allows data to be tracked from start to finish, eliminating the need for trust from users or customers. This will also allow the business to attract more customers. Since each buyer wants to be sure that he is purchasing the expected product, and not a fake or a marriage.
Blockchain technology has demonstrated a new approach to storing funds and conducting financial transactions. Instead of bank accounts, personal wallets are used, access to which only the users themselves have. This eliminated the need for intermediaries – banks. Transaction fees are much lower than bank transfers and take less time to process. Useful if you need to transfer money to another country. Taking into account conversions and transfers through the intermediary system, the user would have to pay up to 10% of the transfer amount or more. To do this, they came up with non-custodial wallets.
The blockchain algorithm is designed in such a way that no one can change or falsify information. However, in some cases, this can lead to the fact that the information will be inaccurate, if you do not organize reliable data verification schemes.
Registry scaling issues
The approach of keeping the entire history on multiple nodes is also far from perfect. Maintaining a https://unicsoft.com/blockchain-development/ requires huge computing resources. In addition, the size of databases continues to grow rapidly. Sooner or later, we will face a situation where there is simply nowhere to store data. Of course, unless “superdisks” are invented before that, capable of storing a fantastic amount of data with low power consumption and size. For example, the Bitcoin blockchain uses about 100 times more computing power than all of Google’s data centers combined.
The developers, of course, are aware of this problem and have found one of the solutions: segmenting the blockchain or sharding. This will solve the problem of scaling and will increase the throughput of transactions. With this approach, each node will not process all network transactions. But it will process and store only that part of the information that belongs to its segment. For example, if the network is divided into 10 separate segments, then the amount of data is reduced by 10 times.
Out of control
On the one hand, preventing third party interference eliminates the risks of fraud and data manipulation. But this also has a downside. Lack of control opens up room for maneuver for those who commit illegal financial transactions. No one will be able to cancel or deny the transaction. In defense of the blockchain, we can say that even before the advent of blockchain, nothing prevented criminals from performing illegal operations. But now it has become a little easier to do.