Technology of Blockchain: Pros and Cons
Cryptocurrency transactions are gaining more and more popularity each day. People tend to prefer the option of paying with digital currency as this method has numerous advantages comparing to usual currency. Besides this, cryptocurrencies have already proven themselves to be a perfect decision for investment as all of them are steadily growing. As a result, those who own crypto assets get a noticeable profit after some time.
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The development of cryptocurrencies is dependent on the blockchain technology which operates the transactions. While the people are getting familiar with the cryptos, blockchain still remains a mystery for the most. Our guide is super easy so that blockchain for dummies Stay tuned: today, we will learn all the positive and negative sides of it.
What is Blockchain?
If you are still wondering what this is, we are here to reveal all the information needed to use this amazing innovation properly. Blockchain definition claims that it is a sequence of blocks which are linked through cryptographic principles. The technology is managed by a number of computers that are not owned by any entity. Thus, it is a constantly growing list of records which includes numerous data. The information cannot be deleted from the blocks so that the transaction details remain there forever.
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Initially, it was designed for the famous cryptocurrency of Bitcoin, but now it is widely used for multiple purposes. It is an entirely new method of documenting information introduced by a person (or a group of people) under the pseudonym of Satoshi Nakamoto. Therefore, it can be said that blockchain technology is going to revolutionize the financial system of the world.
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Advantages of Blockchain
Blockchain is a completely new technology that offers a lot of unique benefits. You should definitely be aware of the most crucial of them to know how to profit from the innovation. The most significant pluses include lower transaction costs, fast processing, security, and transparency. Let’s discuss each of them in detail.
Greater Transparency
The first benefit of blockchain explained is its greater transparency comparing to other financial methods. The data saved on a blockchain is available for every its user, which adds to accountability. In this way, it makes any transaction visible to all users, so each of them tries to be more responsible.
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Plus, it is almost impossible to change the data which is already saved. Any changes require the permission of all the users: to change only one transaction, all the blockchain customers need to agree, and it also will change all the subsequent records. This makes all the information saved really clear and accurate.
Faster processing
To make a transaction via Visa, Mastercard, or any other payment system, you will need to wait. While sometimes it takes several hours, the process also can be as long as several days. Blockchain technology solves this issue: as it is the single digital ledger, there is no need to use third parties in the transactions. By allowing P2P cross-border transfers using digital currency, the transactions are usually completed in several minutes only.
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Security
Another great advantage of this service is its safety. As we have already discussed, blockchain is a sequence of the linked blocks. As a result, each transaction is linked to the previous one, which makes each of them much secure than any other payment method. As it is nearly impossible to change the data in the blocks, the blockchain info is getting less vulnerable to hacks and frauds.
Lower Transaction Costs
While the one still has to pay for transactions via blockchain, their amount is much less than if using any other payment options. The transaction fees are needed to forward the transaction through the network. Plus, the miners, powerful computers that make the whole system work, also need to be paid.
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Even with these expenses, the price of the blockchain transaction is lower compared with other financial systems because it requires no middlemen.
Disadvantages of Blockchain
Although the advantages of blockchain are noticeable and have already made this system one of the revolutionizing innovations of the present time, the technology is not perfect. Blockchain is often regarded as the greatest invention of modernity, but in reality, it also has its limitations. The most crucial ones are delays in transactions, cost of maintenance, and complex verification.
Maintenance Cost
It turns out that maintaining blockchain is a costly pleasure. Since the technology is new, the apps of the service should be switched depending on the options of the operational system and other details. As a result, the blockchain app costs might change – and it is not among the most affordable ones.
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Transaction Delays
As we have already stated, usually, the transactions take only several minutes. But there are some exceptions. Sometimes there occur cases when the transaction is delayed because of many reasons, for example, congested network. In such cases, the payment will now be finished for an indefinite time. And it is definitely stress (and a valid drawback of blockchain).
Signature Verification
Last but not least, blockchain requires a specific digital signature (DS) to identify the person who wants to make a transaction. It is a digital-analog to the usual signature. However, the verification of such a signature is a complicated process as it entails remainder operators.
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Blockchain and Gambling Industry
Since the blockchain transactions are fast and secure, using blockchain for gambling becomes more and more popular. Gambling operators face numerous issues with ordinary banking methods as the transactions often are blocked due to the specific activity of this industry. This problem is easily solved with blockchain wallets: using them is profitable for gaming companies and players themselves.
Crypto gambling is a recent trend: blockchain gambling sites offer various bonuses and have lower fees. Moreover, the transactions are secure and anonymous, which is appreciated by the customers. As the gaming industry faces legal issues in many countries, blockchain technology has proven itself to be an ace up the sleeve for gambling companies. All in all, gambling enthusiasts love it as well due to its noticeable benefits. Great cooperation, isn’t it?