Advantages And Disadvantages For Systems Using Blockchain

Advantages And Disadvantages For Systems Using Blockchain main

With the current bull run, cryptocurrencies are once again in the spotlight. Institutional investors have given some long-awaited legitimacy to the market, as they have begun to buy bitcoin in large amounts to hedge against the upcoming hyperinflation.

With that said, blockchain technology is equally gaining some traction with businesses. People are beginning to accept the advantages of this revolutionary tech and are actively trying to incorporate it into their business model.

However, not every business is suitable for blockchain. To help you realize this, we wrote this article depicting the main advantages and disadvantages of blockchain technology.

After going through this post, you will have a good idea of whether blockchain can be an improvement to a specific business sector or a hindrance. Let’s get started with a quick introduction to blockchain for those less familiar with the technology behind Bitcoin.

A short introduction to blockchain

Blockchain saw its first practical use with the release of Bitcoin in 2009. This distributed ledger was first used to record the transactions on the Bitcoin digital payment network.

This simple concept created the first decentralized network of computers and revolutionized the financial world by providing a global currency independent from banks and governments.

On a blockchain, transaction records are organized in blocks and chained together using cryptography. Millions of computers participate in this verification and conserve an exact copy of this ledger.

This distribution allows for the blockchain to be resistant to change, making every record immutable without proper consensus.

Furthermore, this ledger is entirely transparent and open for consultation at any time. As such no third parties are needed, decreasing the chance of human error and the cost of intermediaries.

Finally, in 2015, we saw the emergence of a revolutionary upgrade to blockchain technology. The Ethereum blockchain introduced us to smart contracts – self-executing applications that can be run only when certain conditions are met.

Thanks to their implementation, we gained the ability to register and tokenize anything of value on the blockchain, not only digital currencies.

Advantages of blockchain

Blockchain technology has brought numerous advantages to its users, mainly through its decentralization properties. Let’s have a look at the most important ones.


As we briefly mentioned in our introduction, blockchains are inherently resistant to hacks and frauds. Thanks to the distributed ledger, a single malicious attack would need to overtake 51% of the nodes on the blockchain network.

While theoretically possible, these 51% attacks are practically impossible due to the time requirements and costs to overtake such a large portion of the entire network. This is especially true with popular Blockchains like Bitcoin.

Moreover, all the assets that are recorded on the blockchain being of digital nature, they are virtually impossible to duplicate or falsify. Each asset is represented by a unique transaction record, making the entire system resistant to fraud.

Advantages And Disadvantages For Systems Using Blockchain ethereum

Time and cost-effective

Compared to traditional financial systems, blockchains provide a faster and cheaper alternative to sending funds with banks, for instance.

Where an international bank transfer might take a few days, with multiple intermediaries, a blockchain transfer takes mere minutes for the fraction of the cost.


All assets recorded on the blockchain can be traced from their origin to their destination, with every step in-between clearly marked on the ledger.

This universal traceability of assets can be used in many industries, and supply chains will certainly benefit the most. For instance, we could trace the origin of the commodity to the end-consumer, helping us find the pain points and improve the process every step of the way.

Disadvantages of blockchain

With that said, blockchain does come with some minor setbacks that need to be addressed.


Many blockchains, especially those that based on a proof-of-work model do not scale well with increased usage.

Due to their design, verifying transactions requires an increased power load, making them extremely inefficient energy-wise. Furthermore, PoW blockchains like Bitcoin become slower as more users join the network, with transaction costs equally increasing.

For instance, Ethereum transaction fees have skyrocketed lately, hindering the increase of the price of ethereum.

Having said that, modern blockchains rely more and more on PoS, which is a much better solution regarding scalability and future adoption.


One of the main disadvantages when pondering on adopting blockchain technology for a business is the deployment cost.

Depending on the size of your project, blockchain technology requires substantial development time and costs regarding project management, continuous implementations, and maintenance.

With that in mind, it is important to have determined whether your business needs blockchain in the first place.

Wrapping up

Blockchain technology has brought numerous innovations to every possible industry know to man by:

● Eliminating the need for third parties
● Providing the highest levels of security for data and financial transactions
● Offering total workflow and supply chain traceability.

It’s clear that the benefits outweigh the drawbacks by a wide margin. This is especially true considering blockchain efficiency is improving with proof of stake blockchains gaining a lot of traction lately.


Leave a reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.