How does Blockchain Technology Work

As the name suggests, it consists of a series of “blocks”. The term “block” refers to a data storage unit within the blockchain. Each block contains the unique number of the block before it and creates a blockchain.

Benefits of Blockchain Technology

Data integrity

Due to the peer-to-peer network system, it is difficult for people to tamper with the data stored on the blockchain. Once a piece of information is added to the chain, there is no change in the integrity and accuracy of this data, even if you review it years after it was added.

More transparency

Most blockchains are transparent and allow outside observers to view the data stored on the chain. This is especially important for cryptocurrencies. It is much easier to track the flow of money through blockchain wallets than through private bank accounts. This transparency can make it easier to identify and track fraudsters.

Decentralized control

Blockchain technology does not rely on large organizations like banks or credit card companies to process your data and money. Instead, the peer-to-peer ledger system prevents any person or organization from gaining too much control over a blockchain.

Disadvantages of Blockchain

Lack of regulation

Because blockchain technology is less regulated, it is much more difficult to recoup losses if the data you store on a blockchain is stolen. If you have currency in a blockchain wallet and someone manages to access your wallet, there is no bank or central institution to help you get that money back. This is a major factor in why a large percentage of the public struggles to trust cryptocurrency and the technology it is built on.

Too much transparency

It is not a good place to store sensitive information as most people have access to most data on the blockchain. Therefore, proposals to use blockchain for government record keeping or medical data should be treated with some skepticism.