The more various industries rely on distributed ledger technology to optimize the flow of assets and efficiently record transactions, the more significant potential for error and complexity. You can use the BitIQ system to gain complete control over your money when trading in bitcoin. The below-mentioned portion looks at blockchain’s pros and cons to clarify some of its potential benefits and limitations.
With insights from industry leaders in finance, tech, software engineering and supply chain management, we explore how organizations use blockchain for payments, smart contracts/ IoT devices, logistics/delivery monitoring etc.
We also examine blockchain’s applications in supply chain management to track products from inception to execution. A number of companies in the space are trying to address this problem, but there is still work to be done. Let’s explore the pros and cons of implementing blockchain technology in supply chain management.
The Pros of Blockchain Technology
1) Provenance and Transparency: One significant advantage of blockchain technology is that it allows you to track a product at every step in its journey. People can use this method to trace the origin and history of any product, ensuring that you are getting what you’ve ordered rather than taking a risk on a counterfeit or less-than-quality product.
2) Improved Traceability: Blockchain also makes it easier to track the history of a product as it is being shipped down the supply chain. For example, people could use this information to trace the path of a product up and down the supply chain to its origins, allowing a company to run multiple lines of an audit by combining blockchain with other structured data models.
3) Inexpensive and Simple: Blockchain technology is inexpensive and easy to implement. Many existing tools use blockchains, such as Ethereum’s Ethereum Virtual Machine (EVM) and Hyper ledger distributed ledger framework. In addition, blockchain is an easily transferable technology.
Unlike many other IT systems, blockchain does not require a third party to hold onto data or process transactions; this makes it much less resource-intensive than its traditional counterparts and could potentially save companies millions of dollars in processing fees. These records are tough to change, meaning the ledger is more secure than traditional methods. The possible automation through these processes improves efficiency and reduces the potential for human error.
4) Identity Protection: Every transaction on a blockchain network contains a unique transaction ID. It makes it easier to identify fraudulent transactions and helps companies prevent tampering. In addition, every network user can make copies of the ledger as a backup, which helps ensure that no single person has complete control over an entire system.
Disadvantages of Blockchain Technology:
It processes fewer transactions per second than credit card networks. However, P2P networks aren’t necessarily faster.
More transactions, more fees:
Adding too many transactions to a block, or overloading the network, could result in an increased number of orphaned blocks (or “orphans”). When a new block is added to the blockchain, it is the first broadcast to all nodes on the network. Each of these nodes will then independently validate it by running its own set of rules and, if validated, send it out to all other nodes. It means that if a node receives higher-than-normal transaction volume, it could be unable to process them in real time, which could cause your transaction to be delayed.
Blockchain can be resource intensive because it is designed to verify and encrypt each transaction. In addition, a powerful computer processing unit (CPU) is required for each node (personal computer connected to a network). It means that a company could require massive amounts of processing power at large scales, making it cost-prohibitive on some level.
Slow Transaction Times: While blockchain is improving transaction times, payments can still take close to three minutes or longer before they are completed. Furthermore, with the number of transactions growing exponentially and the size of those transactions, there’s still a way to go before even the most optimistic estimates will allow for processing them all.
Lack of Standardization: Because Blockchain technology hasn’t yet been able to reach widespread acceptance by industries, it has not yet reached enough critical mass to serve as a proper global standard. It creates a great deal of ambiguity in transaction protocols, and users will require future development efforts to reduce this ambiguity and improve efficiency. Productivity: Blockchain technology is slow, cumbersome and inefficient. So, it is challenging to produce economic value with this technology.
Blockchain technology offers a lot of potentials to improve existing supply chains’ efficiency and cost-effectiveness. But before implementing it or eliminating the traditional paper-based process, companies need to assess their specific needs and examine the potential problems with blockchain implementation before moving forward. By evaluating the pros and cons of blockchain technology and taking an empirical look at its weaknesses, companies can develop an informed strategy for identifying the best course of action for their specific business needs.