What is Blockchain: Benefits, Advantages, and Disadvantages – Blockchain is a way of storing data digitally that is interconnected between one device using another device. The development of this technology is popular because it is widely used.
The use of blockchain itself cannot be separated from cryptocurrencies, although many other fields use this technology. One of the reasons this technology has so many users is that many people think the system is more transparent.
Blockchain consists of two English words, namely block, which means group, and chain, which means chain. As the word implies, This technology is a sequential chain of blocks assembled and distributed together. Each block contains a ledger and three components: data, hash, and hash from the previous block.
In short, blockchain is the record-keeping technology behind the Bitcoin network. In other words, This technology is a new developed for digital data storage systems.
We can conclude that blockchain is a new technology that records and is developed for digital data storage, such as Bitcoin recording. For a further explanation of blockchain, see the full review below.
How Blockchain Works
A brief explanation of how blockchain works are where one device will be connected to another device to record and monitor each other’s data. The most frequent and well-known use of this technology is in crypto. For more details, here’s the flow and workings of the origin of this blockchain technology:
First, a store accepts payments via Bitcoin. Then, some customers want to buy and pay using Bitcoin.
The shop owner gave his wallet address. Then the buyer makes a payment to that address. The transaction took place. This transaction will be sent in the form of a request which will later be sent to the Bitcoin miners.
Bitcoin miners themselves are people or groups who have special devices to perform mathematical calculations for each bitcoin transaction. They are the original part of the block and will form the chain. The miners will calculate the value of the newly sent Bitcoin according to the existing combination and conversion. after getting a value. Then a new block will be created.
This block will later store transaction data between the buyer and the shop owner. After that, the transaction will be verified. And the number of Bitcoins in the shopkeeper’s wallet will increase.
- This technology simplifies the entire transaction process. The reason is, this blockchain can be likened to a digital ledger that anyone can access, whenever and wherever that person is easy and without the need to ask for approval from a bank institution.
- With the blockchain, transactions become more secure and transparent. This can minimize data misappropriation such as bribery or corruption and illegal data theft.
- Blockchain can be used in the financial sector and other fields. McKinsey once created a blockchain opportunity table for various fields such as telecommunications, property, health, agriculture, and media.
As an innovation, this technology does have several advantages. Using a system where each block can check each other, the possibility for errors to occur becomes even smaller. In addition, several other advantages of this blockchain technology include:
1. More Transparent System
One of the advantages of this technology that makes it have many enthusiasts is because the system is more transparent. This is especially the case with cryptocurrencies. The general public can see every transaction that uses blockchain technology.
Those who can learn are also freer because they don’t need access to log in. A similar system also results in every coin belonging to a person that cannot be used for any purpose without the owner’s knowledge.
2. Better protection system
In many existing systems, blockchain is considered to have a more secure system structure. In its application, This technology uses a proof system for miners before the data or transaction goes to the next process. This also protects data stored using the blockchain and is more secure.
Even if you look deeper, this part of the database structure of the blockchain only has features for adding data and no features for editing. No one can change the data in the absence of an edit feature. Thus, the potential for hackers to enter is smaller.
3. Better Audit System
The two previous advantages will also form a much better audit system if you look at the two previous advantages. Audits can also be carried out more easily when everyone can track and view all transaction data. This is also one of the advantages of blockchain technology.
In addition, the potential for data loss is also smaller. This is because the database is only able to add data. The database cannot be deleted, and there is no feature to edit or change data.
4. Prevent middleman fees
The presence of this blockchain can indirectly eliminate the fees of middlemen or an intermediary (brokers), which sometimes add to transaction costs. All data recording and verification activities are directed and immutable with the blockchain.
5. More efficient transactions
With blockchain, transactions can be completed in minutes, not days. Unlike very limited banking systems, this blockchain technology can be operated all year round without stopping. Thus, this blockchain makes transactions more efficient.
6. More flexible data storage
This blockchain makes data storage more flexible because it can store any data according to the implemented field. For example, the medical history of hospital patients, land certificates and homeownership, and even employment contracts can be stored in the blockchain.
In addition to having advantages, This technology also has disadvantages that we need to know. The disadvantages of blockchain include:
1. Expensive cost
Although blockchain technology can reduce transaction costs, customizing this system can only be done by a few people. This relatively new technology still has few experts in the blockchain field. That’s what makes the manufacturing process very expensive.
2. Not environmentally friendly
If we look at Bitcoin mining, the electricity consumed by these super-sophisticated computers is enormous. Let’s say one computer can use the resources equivalent to 100 ordinary computers in general. It made many environmentalists aware, then protested to the Bitcoin miners because the mining process is considered not environmentally friendly.
3. Means of crime
Although data security is very well maintained in the system, it does not rule out the possibility that blockchain can be misused as a means of crime—for example, illegal buying and selling transactions, terrorism financing, and money laundering.
Thank you for visiting. AllinGadget will continue to provide information every day. We always try to provide the latest and best information for you. I hope you get the information you want. If you have criticism and feedback, don’t hesitate to contact us via email at firstname.lastname@example.org. Have a nice day.