Table of contents
What is Blockchain?
What is a Decentralized network?
Benefits of Blockchain Technology
Limitations of Blockchain Technology
Blockchain is a technology that involves a series of distributed transactions referred to as a Ledger on a block of decentralized network linked together with a chain to ensure security, transparency, and scalability of the ledgers through computer nodes.
A decentralized network is a type of network that is exclusively transparent to all the nodes on the network and it's not controlled by any central authority. Each node on the network can see the series of transactions done by another node on the network. This ensures transparency and enhances security on the network.
BENEFITS OF BLOCKCHAIN TECHNOLOGY
Transparency: Blockchain technology enhances transparency with the use of a distributed ledger, it enables all transactions performed by a node to be visible to other nodes on the network. This technology can be adopted by the government to show full transparency in the governance, military, and other agencies.
Security: Blockchain technology provides security by enabling user's data to be sensitive and crucial. With blockchain technology, records created can't be altered and also information is encrypted end-to-end with hashing. This enables blockchain to prevent fraud and unauthorized activities. All nodes on the network are aware of the status of other nodes on the network.
Trading Cryptocurrencies: Blockchain technology also enables the trading of cryptocurrencies which involves buying and selling of tokens on exchanges in an attempt to make profit from price fluctuation of the market.
Job Opportunity: Blockchain creates more job opportunities for people. An example is the trading of cryptocurrencies and NFTs on blockchain.
LIMITATIONS OF BLOCKCHAIN
Scalability: The blockchain architecture is built on decentralized networks and has difficulty processing large volumes of transactions in a short period. For example, bitcoin’s blockchain currently has a maximum throughput of about 7 transactions per second, so the throughput is very low.
Energy Consumption: The consensus uses a higher energy consumption machine to solve puzzle of mathematical problems.
Uncertain Regulation: Since the technology is decentralized and unregulated, there’s no centralized authority to enforce user behavior or verify identity information.