Benefits
Transparency and Trust
- Enables trust in a trustless environment due to its cryptographic nature
- Provides a clear and transparent view of assets and their ownership.
Security
- Managed by miners and the community, ensuring a high level of security.
- Decentralization makes the blockchain less vulnerable to attacks.
Smart Contracts
- Automates and enables decentralized applications (DApps) to perform tasks securely and efficiently.
Supply Chain and Asset Management
- Effective for tracking and managing supply chains and other assets.
Disadvantages
- Blockchain technology requires specialized knowledge, and skilled professionals are still relatively scarce.
- Slower than centralized systems due to the need for consensus.
- Current transaction processing speed is low; e.g., Ethereum processes ~15 transactions per second compared to Visa’s ~70,000 transactions per second.
- Consensus algorithms like Proof of Work (PoW) consume significant energy, making blockchain expensive to operate.
- Running and maintaining a blockchain network can be costly.
- Implementation and adoption are still ongoing challenges.
When to Use a Blockchain
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Appropriate Scenarios:
- When public transparency and security are critical.
- Peer-to-peer transactions with low fees and no intermediaries are needed.
- Trustless environments where decentralized validation is essential.
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Avoid Blockchain If
- A centralized database can fulfill requirements more efficiently.
- Transaction speed and scalability are critical, e.g., high-volume applications like Visa.