Top advantages and disadvantages of blockchain technology
There's no question that we are in the midst of a technological revolution. Everyone is probably familiar with all of the big technological trends that are going on, but I believe the technology likely to disrupt the world the most over the next 20 years is not big data, the internet of things, cloud computing or machine learning. Instead, I see blockchain, the technology behind cryptocurrencies, coming to the forefront.
We need help establishing trust. We need help verifying the identity of parties in a transaction. We need help with the clearing and the settling of those transactions. And we need help with the record keeping. What we turn to for all of those important functions of e-commerce are basically intermediaries. These intermediaries take different shapes and forms. People are obviously familiar with banks. But as a result of the digital revolution, we're also seeing tech conglomerates act as arbiters in online transactions.Generally speaking, these intermediaries do a pretty good job, but they have certain limitations. Today, the power is in the hands of few huge conglomerates like Google, Facebook, Microsoft, Apple, Banks, ... What I like the most about Blockchain is that has the potential of making Internet MORE DEMOCRATIC, bringing the power back to the user.
Blockchain technology was invented back in 2008 but it’s just now taking the internet, technology, and even banking by storm.
THE BIGGEST ADVANTAGE: DISINTERMEDIATION
The core value of a blockchain is that it enables a database to be directly shared without a central administrator. Rather than having some centralized application logic, blockchain transactions have their own proof of validity and authorization to enforce the constraints. Hence, with the blockchain acting as a consensus mechanism to ensure the nodes stay in sync, transactions can be verified and processed independently.
Why is disintermediation good for us? If the contents of a database are stored in the memory and disk of a particular computer system run by a third party even if it is a trusted organization like banks and governments, anyone who somehow got access to that system can easily corrupt the data within. Thus the third-party organizations especially those who control important databases need to hire many people and design many processes to prevent that database being tampered with. Unavoidably, all this takes a great amount of time and money.
However, with blockchains, we can now replace these third-party organizations with a distributed database, locked down by clever cryptography.
Empowered users: Users are in control of all their information and transactions.
High quality data: Blockchain data is complete, consistent, timely, accurate, and widely available.
Durability, reliability and longevity: Due to the decentralized networks, blockchain does not have a central point of failure and is better able to withstand malicous attacks.
Process integrity: Users can trust that transactions will be executed exactly as the protocol commands removing the need for a trusted third party.
Transparency and immutability: Changes to public blockchain are publicly viewable by all parties creating transparency, and all transactions are immutable, meaning they cannot be altered or deleted.
Ecosystem simplification: With all transactions being added to a single public ledger, it reduces the clutter and complications of multiple ledgers.
Faster transactions: Interbank transactions can potentialy take days for clearing and final settlement, especially outside of working hours. Blockchain transactions reduce transaction times to minutes and ara processes 24/7.
Lower transaction costs: By eliminating third party intermediaries and overhead costs for exchanging assets, blockchains have the potential to greatly reduce transaction fees.
THE BIGGEST DISADVANTAGE: PERFORMANCE
Because of the nature of blockchains, it will always be slower than centralized databases. When a transaction is being processed, a blockchain has to do all the same things just like a regular database does, but it carries three additional burdens as well:
- Signature verification. Every blockchain transaction must be digitally signed using a public-private cryptography scheme such as ECDSA. This is necessary because transactions propagate between nodes in a peer-to-peer way, so their source cannot otherwise be proven. The generation and verification of these signatures is computationally complex, and constitutes the primary bottleneck in products like ours. By contrast, in centralized databases, once a connection has been established, there is no need to individually verify every request that comes over it.
- Consensus mechanisms. In a distributed database such as a blockchain, effort must be expended in ensuring that nodes in the network reach consensus. Depending on the consensus mechanism used, this might involve significant back-and-forth communication and/or dealing with forks and their consequent rollbacks. While it’s true that centralized databases must also contend with conflicting and aborted transactions, these are far less likely where transactions are queued and processed in a single location.
- Redundancy. This isn’t about the performance of an individual node, but the total amount of computation that a blockchain requires. Whereas centralized databases process transactions once or twice, in a blockchain they must be processed independently by every node in the network. So lots more work is being done for the same end result.
Nascent technology: Resolving challenges such as transaction speed, the verification process, and data limits will be crucial in making blockchain widely applicable.
Uncertain regulatory status: Because modern currencies have always been created and regulated by national governments, blockchain and Bitcoin and Ethereum and others face a hurdle in widespread adoption by pre-existing financial institutions if its goverment regulation status remains unsettled. My personal prediction is that goverments will regulate during the next months because billions and billions are being already invested in blockchain projects.
Large energy consumption: The Bitcoin blockchain network's miners are attempting 450,000 trillion solutions per second in efforts to validate transactions, using substancial amounts of computer power.
Integration concerns: Blockchain applications offer solutions that require significant changes to, or complete replacement of , existing systems. In order to make the switch, companies must strategize the transition.
Cultural adoption: Blockchain represents a complete shift from a full centralized world to a more decentralized world. We are used to trust in a third party organization for almost everything. For the first time we can transact with others without the need of a third party.
Cost: Blockchain offers tremendous savings in transaction costs and time but the high initial capital costs could be a deterrent.
In the billion-dollar professional market for recruiting and social selling, much of the money spent goes to intermediaries. Blockchain technology enables bypassing intermediaries by allowing a direct connection between professionals and businesses. One startup seeking to bring transparency, privacy and control to online users is Profede.
Modern data-driven culture has advanced many industries including recruitment, professional services and the way we conduct business, but expect even further advancements as Profede’s horizontal protocol is capable of disrupting a global market. Blockchain-based Profede enables professional users to gain back control, power, and privacy from the jeopardizing methods which currently exist. Professional users set a price that they are willing to accept for responding to contact requests and mails and decide who they want to approve contact with, making users the main participant in the profit equation.
beBee is promoting actively Profede because 1 ) beBee invested in Profede 2) beBee will be the first platform to use Profede's technology to reward our userbase 3) here you can find the future of bebee https://www.bebee.com/producer/@javierbebee/future-of-bebee
beBee is betting on Blockchain Technology to disrupt the professional market.
CEO at beBee. PHD from Deusto University. Ex Oracle. Expert in software engineering, complex platforms building and managing teams and technical resources. Entrepreneur with solid background in technology, complex-project management and blockchain enthusiast.