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Explore the Pros and Cons of Blockchain Technology

Pros and Cons of Blockchain

What is Blockchain Technology?

The Internet has allowed people and businesses to collaborate in new ways via networks and communities, where individuals build, self-govern, and flourish. By facilitating a decentralized and transparent collaboration and value exchange within such setups, blockchain technology is writing a new chapter in the history of the Internet. However, what precisely is blockchain? What are the advantages and disadvantages of blockchain technology? Let’s investigate.

Blockchain technology is a decentralized, distributed ledger that maintains a record of economic transactions over a network of computers or nodes. Blockchain uses decentralization and cryptographic hashing to make any digital asset’s history immutable, secure, and visible. Blockchain was introduced as an underlying technology for Bitcoin by Satoshi Nakamoto in 2008.

Here’s a list of the top 6 pros and cons of blockchain technology which will be followed by details below:

Pros of Blockchain TechnologyCons of Blockchain Technology
Decentralized & TrustlessScalability
Low Cost & Quicker RemittancesNo Control for Enterprises
No Single Point of FailureUncertain Regulations
Censorship-resistantVulnerable to Hacking Attacks
Enhanced Security and
Transparent & Universal
Recording System
Cultural Disruption

Pros of Blockchain Technology

1. Decentralized & Trustless

Decentralized Trust
Source | Freepik

A blockchain allows the peer-to-peer transfer of value between parties without relying on a third party or a central authority. Since the data is stored over a decentralized network of servers after it gets validated via a consensus, the transacting parties do not need to know each other to transact, i.e., they operate in a trustless environment.

When considering the pros and cons of blockchain technology, one advantage of this is that it removes the need for intermediaries or middlemen in a process. This can be beneficial because middlemen often charge a fee for their services, and the cost of these fees can add up over time, especially if a process involves multiple steps. Additionally, there is no guarantee that middlemen will be honest and transparent in their dealings, and they may potentially engage in corrupt practices that benefit themselves at the expense of others. By eliminating the need for middlemen, blockchain technology can potentially improve trust in a system by removing this potential source of corruption.

2. Low Cost

Low Operational Cost
Source | Freepik

Since a blockchain eliminates the need for centralized servers to run the operations, the overhead costs decrease. There are no banking or payment processing costs involved as transactions happen directly over a blockchain without any intermediary or central authority involved. The contracts and transactions are integrated into the network and usually do not require human effort.

This ultimately enables lower transaction fees for end users. When using traditional methods, it is common to pay a fee for services, and these fees can add up over time, especially if a process involves multiple steps. In contrast, blockchain technology can offer lower fees and quicker transactions/settlements when it comes to simple funds transfer and P2P payments. It is important to note that the specific fees associated with using blockchain technology may vary depending on the specific implementation and use case of a blockchain network.


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3. No Single Point of Failure

No Single Point of Failure
Source | Freepik

Being a distributed network, blockchain is highly secure and eliminates the possibility of a single point of failure. Your company’s entire network may be instantly destroyed if a hacker obtains access to the central server or database, but not in the case of a blockchain. 

With each node sharing the database, the network becomes secure and tamper-proof. This is because a blockchain is a distributed ledger system that stores data and uses a consensus process to verify the authenticity of the information before it is added to the ledger. 

This means that it is difficult for anyone to add false or inaccurate data to the blockchain or manipulate existing data, drastically reducing the chances of error and fraud. Additionally, the use of a consensus process and the lack of a need for manual data entry can help to reduce the risk of human error, further improving the integrity of the data on the blockchain

4. Censorship-resistant

Censorship resistance

Being censorship-resistant is another prominent aspect of public blockchains. With a centralized system or servers, anyone powerful enough will be able to take it down unilaterally for multiple reasons. And we’ve seen such instances repeating like broken record throughout history, impacting ordinary people way more than the affluent. Mind you, the focus here is on the censorship enforced especially for wrong reasons. Blockchain is designed to prevent centralized institutions having too much power. For instance, it would be very difficult for a single entity to censor blockchain data if the blockchain network is decentralized and has a large number of nodes. This is because the data on the blockchain is replicated across all of the nodes in the network, so it would be impossible to censor the data on all of the nodes.

In addition, blockchain technology is constantly evolving, and there are new ways being developed to make blockchain data more censorship-resistant. For example, some blockchain networks are now using sharding, which divides the blockchain into smaller pieces that are stored on different nodes. This makes it more difficult for a single entity to censor the data on the blockchain.

5. Enhanced Security And Confidentiality

Enhanced Security And Confidentiality
Source: Freepik

Compared to centralized systems, blockchain technology is highly decentralized and is intrinsically more secure. Any effort to change a record will be immediately apparent because copies and digital signatures are automatically compared. The data is protected from hackers by an additional degree of confidentiality as users of a blockchain network are not required to enter their personal and financial details. 

The structure of a blockchain is designed to be robust and decentralized, with no single point of failure or control. This means that the network is difficult to disrupt or take down, and it can continue to operate even if individual nodes or components fail. Additionally, the use of cryptographic techniques to secure the data stored on the network can make it resistant to hacking attempts, further contributing to its overall durability. Overall, the decentralized and secure nature of blockchain technology can make it a reliable and robust platform for storing and managing data.

6. Reduced Fraud

Reduced Fraud
Source: Freepik

The advantages of blockchain technology makes it perfect for financial companies looking to reduce forgeries. Any attempt to duplicate transactions is impossible because every transaction is validated and its provenance checked from the blockchain database via a consensus, eliminating the risk of manipulation or tampering. 

This means that the data stored on the blockchain is accurate and cannot be altered once it is added to the ledger. This is achieved through the use of a robust consensus process and cryptographic techniques that ensure the security and integrity of the data. Additionally, the use of a unique hash identifier for each block of data can help to maintain the integrity of the information on the blockchain. Overall, the high level of integrity of blockchain technology can make it a reliable and trustworthy platform for storing and managing data.

7. Quick Transactions

Quick Transactions
Source | Freepik

In the case of traditional banks, it can often take a significant amount of time to process transactions, especially if the funds are being transferred internationally. In contrast, transactions on a blockchain network can be processed much more quickly, often within a few seconds. This can be particularly useful in situations where a fast turnaround is important, such as in emergency situations. Overall, the faster transaction processing times offered by blockchain technology can be a significant advantage compared to traditional methods.

8. Transparent & Universal Recording System

Transparent & Universal Recording System
Source | Freepik

Blockchain transactions are logged in a public ledger that anyone on the internet can access. Everyone can see how much money is in the wallet, but no can tell who the owner is. A wallet may be connected to a person or a group. Transparency is a huge advantage of blockchain technology while maintaining sufficient privacy. 

Another characteristic of blockchain technology is that it allows for the storage of data in an immutable manner, meaning that the data cannot be changed or deleted once it has been added to the ledger. This is achieved through the use of cryptographic techniques, such as hashing, which creates a unique identifier for each block of data. 

If anyone attempts to change the data in a block, it would result in a different hash identifier, making it obvious to other users that the data has been altered. Additionally, the ledger system on a blockchain is typically open for all participants to see, further contributing to the transparency of the data stored on the network.

9. Better Accessibility

Better Accessibility
Source | Freepik

Anyone with a computer and an internet connection can join a public blockchain network because it is decentralized and open to anyone. No one organization controls it, and everyone can contribute to it.

In traditional centralized systems, users often do not have direct control over their data and may be vulnerable to abuse or misuse by corrupt individuals. In contrast, the peer-to-peer nature of a blockchain network allows users to have more control over their own data, as they can choose which information to share and with whom. The high level of security and transparency provided by blockchain technology can further ensure that users are in control of their own information and that it is not misused by others. Overall, the ability to give users more control over their own data is a significant advantage of blockchain technology.

10. Prevents Double Spending

Prevents Double Spending
Source | Freepik

Double spending is a form of fraud in which the same digital asset is spent more than once. Blockchain is a public distributed ledger that records and verifies transactions using cryptographic techniques. When a transaction is made on a blockchain, it is stored in the distributed database and is cryptographically validated by a majority of the network nodes. This creates an immutable and traceable record of transactions that can be used to validate future transactions.

The use of a consensus algorithm to validate transactions also helps to prevent double-spending. In order for a transaction to be considered valid, it must be approved by a majority of the network nodes. This ensures that only legitimate transactions are added to the blockchain, and it makes it difficult for anyone to attempt to spend the same digital asset more than once. Overall, the combination of a distributed ledger, cryptographic validation, and a consensus mechanism helps to prevent double spending on a blockchain.

11. Seamless Integration Into Existing Systems

Seamless Integration Into Existing Systems
Source | Freepik

Blockchain technology can be seamlessly integrated into existing systems in two main ways: as an application platform or as a service (BaaS).

An application platform allows anyone to use decentralized technology to build and deploy blockchain-based applications. These applications can be used to track and verify various types of data, such as financial transactions, supply chain records, or identity information. The use of an application platform can be a flexible and cost-effective way to leverage the benefits of blockchain technology.

On the other hand, Blockchain-as-a-service (BaaS) allows businesses to connect directly with blockchain networks and use them to build and deploy applications. BaaS providers offer a range of services, including infrastructure, support, and consulting, to help businesses implement and use blockchain technology. BaaS can be particularly useful for business organizations that want to use blockchain technology but do not have the resources or expertise to build and maintain their own infrastructure.

Cons of Blockchain Technology

1. Scalability

blockchain scalibility
Source: Freepik

Scalability is probably the greatest disadvantage of blockchain technology, given its incapability to handle transactions on a mass scale. Fewer transactions can be processed per second with blockchain technology, as every transaction needs to be validated by the majority of the nodes to be approved and become a part of the block. This leads to issues like network congestion and high transaction costs. 

Another issue with blockchain technology is that it may not be fully compatible with legacy networks, which can be a problem for enterprises that rely on these systems. In some cases, it may be necessary to completely replace legacy networks in order to use blockchain technology, which can be a significant undertaking and may be met with skepticism or resistance. Overall, the potential difficulty in integrating blockchain technology with legacy networks is something to be keep in mind while evaluating how to make use of this technology.

2. Vulnerable to Hacking Attacks

Source | Freepik

Although we did talk about how blockchain advances the overall security of our records and assets, we need to keep in mind this technology and the larger industry is still in its early days. To start off, keep in mind we are not talking about standalone blockchains like L1 platforms. Layer 1 blockchains have been remarkably secure against security breaches to date. For easier understanding, L1 blockchains like Shardeum and Ethereum can be compared to operating systems in Web2 world that in turn are used by various applications to render useful products and services to people.

However, solutions built and operated around L1 blockchains like bridges (to swap and transfer tokens from one chain to another) for instance typically don’t have the same level of security via consensus algorithms like L1 blockchains are known for. And worse, lack of sufficient decentralization makes such solutions vulnerable to malicious activities on a public network. Then there are classic rug pulls. In the context of both the traditional finance and in Web3 industry, rug pulls are a type of scams where the developers of a cryptocurrency project or mutual fund abandon the project and take all of the investors’ money.

If you see all these patterns, it would eerily strike similarity to the internet days of late 1990’s and early 2000’s when reports of malware, antivirus, phishing and all sorts of cyber crimes on the news cycle never seemed to take a pause. Basically, any new system or protocol is going to be always susceptible to bad actors gaming them with an aim to steal funds and/or cause other material damages.

3. Speed

Source | Freepik

The speed of blockchain technology is co-related to its lack of scalability which is another important drawback. While blockchains are now increasingly used for simple peer to peer payments and transfer of funds/remittances internationally as a result of its low cost and instant settlement, more complex transactions that takes place in supply chains and identity management spaces take longer to complete than traditional technologies. Blockchain networks like Bitcoin and Ethereum cannot process more than 20 transactions per second (TPS) while their Web2 peers like Visa and Nasdaq processes up to 5000 TPS. Industries like gaming that caters to millions of micro transactions every millisecond would need an apparatus that can support a high throughput.

Blockchain transactions may not be as fast as other solutions. This is because the computation needs of blockchain technology can be more repetitive than those of centralized servers. Every time the ledger is updated, all (or at least some) the nodes in the network need to update their copy of the ledger as well. This is necessary because the distributed nature of the ledger system requires every node to have a copy of the ledger, but it can also add to the processing time required for transactions. Newer blockchains like Shardeum is aiming to scale limitlessly through innovative protocols.

4. Lack of In-House Capabilities

Lack of In-House Capabilities
Source | Freepik

One potential challenge of using blockchain technology is that it is a relatively new and complex field, and there may be a limited pool of experienced developers who are capable of working on it. This can make it difficult for enterprises to find a qualified team to handle the development of a custom blockchain solution. 

To address this challenge, some enterprises may choose to use a BaaS provider, which can offer a range of services, including access to high-end developers and marketing teams, to help them develop and bring their blockchain solution to market. Overall, the availability of qualified developers in blockchain/Web3 ecosystem is something to ponder about until the industry matures.

5. Uncertain Regulations

Uncertain Regulations
Source | Freepik

Uncertain regulations can be a major disadvantage or a discouraging factor to leverage blockchain technology. This lack of regulation can also contribute to the problem of ICO scams, in which individuals or organizations raise funds through the sale of tokens that may not have any intrinsic value. Further, the lack of regulation in the cryptocurrency sector can make it difficult for governmental institutions and large scale enterprises to adopt blockchain technology overnight, as they may be hesitant to use a system that is not subject to the same level of oversight as other financial technologies. 

6. No Control for Enterprises

No Control for Enterprises
Source | Freepik

Using blockchain technology may not offer the same level of control for enterprises as traditional systems. In particular, public blockchains may not provide the same level of authority and control as other traditional systems, which can be a challenge for some organizations. 

However, the emergence of private and consortium blockchains, which are often referred to as enterprise blockchain frameworks, has the potential to address this issue by offering a more modern approach that combines the control and distributed nature of blockchain technology while retaining the power and authority that comes with traditional applications. Hence it must be noted that while blockchain’s overarching theme is about giving power back to the rightful owners, the people and introduce decentralization in our societies, it is envisioned as an open-source technology at the end of the day which can be leveraged in any shape or form by anyone interested to improve them and customize them as needed. The only difference is that public open source blockchain technology like Shardeum is working hard towards empowering people more than ever.

7. Cultural Disruption

Cultural Disruption
Source | Freepik

A potential disadvantage of using blockchain technology is that it can disrupt established business models and cultural norms. This is because blockchain technology has the potential to fundamentally change how systems and industries operate, and it can be a challenge for organizations that have been using traditional models for a long time to adapt to these changes. 

In some cases, the adoption of blockchain technology may lead to the obsolescence of certain marketplaces and industries, as it can disrupt the way that businesses operate and interact with one another. It is important for organizations to carefully evaluate the pros and cons of blockchain technology on their business models and operations before deciding how to use it.


This was all about the advantages and disadvantages of blockchain technology. It is a cutting-edge technology providing decentralized data storage and transmission. Even though it has some drawbacks, most can be overcome with proper development and implementation. While public blockchains cater to general public offering services and solutions without intermediaries and data abuses, hybrid or consortium blockchains can be considered for enterprises.

Frequently Asked Questions (FAQs)

1. What are the Advantages of Blockchain Technology? 

There are many advantages and disadvantages of blockchain technology. However, its advantages like verifiability, transparency, immutability, versatility, and security supersede its disadvantages.  

2. What are the Disadvantages of Blockchain Technology?

While there are several pros and cons of blockchain technology, its cons like lack of scalability, lack of complete anonymity, traceability of transactions, and lack of speed are some issues that the technology needs to improve upon.

3. What is the Biggest Problem with Blockchain Technology? 

Despite the numerous pros and cons of blockchain technology, the biggest problem is its inability to scale to become a viable solution fit for mass-scale adoption. However, developments are being made in this regard. 

4. Can the Blockchain be Hacked? 

Although it is very difficult to hack a blockchain, an attack of a higher degree, such as the 51% attack, where the hackers get control over 51% or more network resources, can compromise a blockchain network. Blockchain being a highly distributed global network with a robust consensus mechanism makes it almost impossible for any single authority or groups of attackers to take over the network. 

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Last Updated on August 7, 2023

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