Berntson Porter Coronavirus Resource Center Details

BP Blogs

LIKE WHAT YOU READ? Share this article :

Blockchain: The Pros and Cons

|

Blockchain continues to be a hot topic in 2018, partially due to the continued popularity of Bitcoin. Blockchain technology is a shared recordkeeping system that enables users to securely record and share information. This technology comes with many benefits but also has certain limitations.

Blockchain could have potential benefits for manufacturing and distribution companies. For manufacturers and distributors, blockchain can be used to validate data and has uses for anti-counterfeiting. Manufacturers and distributors can validate supplies and inventory are from legitimate sources, validate their suppliers’ licenses and certificates, and create and maintain an audit trail for all blue prints and product designs to quickly identify and take action against any theft or counterfeiting. Additionally, if the history is shared with consumers, consumers will gain confidence in their purchases as they can ensure what they are purchasing is not counterfeit and is actually manufactured as it was represented.

While Blockchain may provide many benefits, it does have drawbacks. The most common concern is how large Blockchain data files can become. Blockchain maintains the entire history; as transactions increase, so does the volume of data usage and consumption. Eventually, these files may become too large to sustain, especially in a world where data is exponentially increasing in usage. Blockchain transactions can also be slow to process. This is partially due to the file size but also a result of the Blockchain transaction process. When a transaction occurs within a Blockchain, every computer that is part of the Blockchain records the transaction. The data being recorded with each transaction grows, compounded by each computer recording the transaction. This results in new challenges with the Internet of Things, as each sensor is designed to work together, but as each device records the same information, duplication and inefficiency is prevalent. Furthermore, Blockchain users are seeing a loss of anonymity. Blockchain is open source, so any individual involved in the network and recording transactions can see its entire history.

Many developers are working to develop alternatives that have the benefits of Blockchain while also addressing the arising concerns of its potential users. One such creation is the Tangle, developed by IOTA. IOTA has designed the Tangle to reduce data size and processing by requiring users to validate portions of the transaction history when they make transactions and relying on previous confirmations from other users. While still early in development, this could be the next step in peer-to-peer recordkeeping.

While technologies that were originally designed for cryptocurrencies continue to grow and evolve, users will continue to find new uses for this technology. When considering Blockchain, Tangle, or a similar technology, you should clearly identify your business’ goals and analyze the strengths and weaknesses to determine what is right for you.