Disadvantages of Blockchain

DISADVANTAGES OF
BLOCKCHAIN
101blockchains.com

What is
Blockchain?
Blockchain is a decentralized and
distributed ledger system. In
blockchain technology, the data
is stored within blocks and then
linked to one another, forming a
chain of blocks.
The ledger is also immutable,
meaning once the data is in the
ledger, no one can alter or delete
that data.

Key Features of Blockchain
Immutability
Decentralized
Enhanced Security
Consensus protocol
Faster Output

Disadvantages of Blockchain
Technology
Not a Distributed Computing System
Low Scalability
Not Energy Efficient
Unavoidable Security Flaws
Cost Struggle
Users Maintain Private Keys
Difficult to Replicate
Data is Immutable
Inefficient Process Privacy Concerns
Interoperability
Support for Legacy Systems
No Regulations Maturity

Not a Distributed
Computing
System
Blockchain is a distributed network,
but it’s not a distributed computer
system. In a distributed computer
system, the network actually does not
depend on the participation of the
users.
But in blockchain, it heavily depends
on the participation of quality nodes.
Here, all nodes perform the same task,
which means it lacks mutual assistance
and synergy.

Low Scalability Most blockchain platforms are still
not scalable enough. Transactions
within this technology depend
heavily on network congestion.
Thus, the more people will join the
network, the more the network will
slow down. There are solutions on
the way, but the blockchain is still
not well-equipped to handle real-
world requirements.

Not Energy
Efficient
Some of the public blockchain
platforms, such as Bitcoin or
Ethereum, are not energy efficient. For
example, platforms that use the Proof
of Work consensus protocol consume
a lot of electricity, which is not
beneficial for the environment.
On the other side, there are platforms
that offer energy-efficient options, but
these are not widely adopted yet.

Data is
Immutable
It’s an advantage and disadvantage
of blockchain technology at the
same time. In a blockchain, once
data gets added to the ledger, it can’t
be altered. So, it becomes an
absolute constant.
Unfortunately, human-made errors
can lead to discrepancies within the
system as they can’t be fixed. Also, if
an entity holds more than 50% of the
nodes, that entity can break this
immutable nature of blockchain.

Inefficient
Process
Blockchain can be inefficient under
certain conditions. The efficiency of
blockchain technology varies from
platform to platform. Some platforms
can offer more output compared to
others.
In most cases, when there are too many
users within the network at a time, it can
create slower transaction processing.
This is not ideal for commercial purposes
where thousands of transactions need to
happen within a small-time frame.

Unavoidable
Security Flaws
Blockchain offers security, but it’s
not 100% secured. It’s vulnerable to
51% attack. It’s also quite vulnerable
against quantum computing
systems.
Also, users can exploit certain
loopholes within a contract to
manipulate the system for their
gain. So as for now, it does not offer
security against all types of cyber-
attacks.

Users Maintain
Private Keys
Blockchain does offer a great deal of
control to its users. Here, users will
need to own and maintain their
private keys, which is extremely
crucial in accessing all the assets
stored on the ledger.
If users fail to keep the private key
secured or even lose it, they will lose
their network access and assets.
Unfortunately, many users aren’t tech-
savvy enough to avoid such mistakes.

Cost Struggle
Implementing blockchain-based
solutions from scratch is a costly
investment. Although many platforms
are open-sourced, and they still need
moderations for which hiring an expert
team is necessary.
Also, bigger enterprise companies have
a huge network system, which adds up
to more investments and maintenance
costs. Therefore, it can become a
burden.

Difficult to
Replicate
Blockchain comes with a complex
network infrastructure. To implement
a new blockchain project, developers
need to have extensive knowledge of
the subject.
Developers need to learn about
cryptography, hash functions,
consensus algorithms, etc. Without
being a blockchain expert, software
developers can’t replicate any type of
blockchain platform.

Maturity
Blockchain technology is a new
technology that is still in the
development phase. It requires more
time to mature and become an
acceptable technology across the
globe.
As there are still persistent issues,
enterprise companies find it hard to
rely on this technology. Unfortunately,
without giving adequate time for this
technology to mature, this issue will
not be resolved.
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Interoperability
Interoperability is a major disadvantage
of blockchain technology. There are
many blockchain platforms on the
market now, but the lack of a common
standard for developing these platforms
is making them isolated from one
another.
Cross-chain communication can
streamline a lot of sectors; however,
blockchain is still far behind in
developing a functioning interoperable
network.

Support for
Legacy Systems
As most businesses use legacy systems
to facilitate their processes, using the
blockchain instead of these systems
will require additional investments.
At the moment, blockchain does not
fully support integration with legacy
systems, which means these
companies will need to completely get
rid of their previous networking
system. This is not feasible for a lot of
companies.

Privacy
Concerns
This is an issue specifically for public
blockchain platforms. In a public
blockchain, the data is anonymous
and encrypted; however, it’s still open
for everyone to see from the ledger.
One can track down a particular
address by going through the
transaction processes on the ledger.
However, private blockchains get rid of
this problem.

No
Regulations
The blockchain platform does not
have any governing authority. This
means it does not have any specific
regulations to follow.
Regulations help users to maintain fair
play within the network, which is not
present in many blockchain platforms.

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