An Overview of the Advantages and Disadvantages of Blockchain and Its Related Solutions

Blockchain is an adventive technology that has been successful in making big changes in the technologies of the world in its short lifespan. Variable advantages of Blockchain and its complex verification mechanisms have turned this technology into an appropriate choice to develop the world’s valid cryptocurrencies. The application of Blockchain in the fields such commerce and supply chain management, intellectual property, financial and banking affairs, voting, and medical systems are developing day by day.

An Overview of the Advantages and Disadvantages of Blockchain and Its Related Solutions
An Overview of the Advantages and Disadvantages of Blockchain and Its Related Solutions


Blockchain has been one of the biggest changes in technology in recent years. Different fields such as industry, food supply chain, and banking all use Blockchain or are doing experiments on its features. As it has made many affairs more comfortable, Blockchain suffers from some problems and disadvantages, which will be discussed about more with its emergence in different fields. The aim of the present article is to investigate the advantages and disadvantages of Blockchain and also the techniques of facing with these faults. In addition to investigating the advantages and disadvantages of Blockchain technology and the ways of confronting with it, I have stated my personal ideas about the advantages and disadvantages of Blockchain through raising questions and finding appropriate answers.

How Does Blockchain Work?

Blockchain is likened to a DNA chain that regularly increases in size with entering the information of new transactions. These transactions are placed in the blocks, and every block is connected to the previous block, and finally, it forms a chain of blocks or Blockchain. The nodes which are in the Blockchain network assess the validity of these transactions, and in case the transaction is valid, they add it to a new block, which is called mining. 
The complex mechanism of verification in the Blockchain network causes a node to not to be able to obtain the majority of the network and be able to disturb the process of verification. This process needs a very high calculative power so that the node is able to solve the mathematics problem sooner than the others (a mathematic formula should be calculated for the mining which requires a high calculation power) and reach a 51 percent consensus, that node can add an erroneous verification to the block. In addition, because each block is connected to its previous one, there is no chance for deliberate tampering with that block. (Gatteschi, Lamberti, Demartini, Pranteda & Santamaría, 2018)

Blockchain Evolution

Blockchain was first used to record Bitcoin transactions in 2008. Bitcoin was the first prototype of cryptocurrencies, and it is used to transfer money without any middleman. As time passed, new scenarios of Blockchain application were created, and some of them were practically developed, and Blockchain technology surpassed cryptocurrencies. Today, the applications of Blockchain are defined in the fields such as authentication (like driving license, ID card and passport), the keys of physical properties (such as the key at hotels and homes, rental cars, and IoT-based devices), intangible properties (such as brand name, copyright laws, domain name, ownership proof, and digital laws) and many other cases that some of these fields are currently using Blockchain, and it has the potential to be applied in the other fields.
Three evolution periods can be considered for Blockchain: Blockchain 1.0, 2.0, and 3.0.5. Blockchain 1.0 was basically related to Bitcoin and cryptocurrencies. Since Bitcoin’s birth up to now, more than 600 kinds of cryptocurrencies have been generated. As the focus of Blockchain 1.0 is on the money, Blockchain 2.0 is about confirmations, transferring the asset, contract, and registry. But in Blockchain 3.0 the applied fields are not limited to finance and related transactions to the asset, rather it is also used in parts such as government, health, science and education. (Gatteschi, Lamberti, Demartini, Pranteda & Santamaría, 2018)

Advantages and Applications of Blockchain

Blockchain is currently used in some fields and areas. Some of them still prototype, and some others have completely been developed and are used publicly. Some of the Blockchain advantages in the fields which are practically used are introduced here.

Management of Personal Data

The programs which generally use Blockchain in this field employ Blockchain wallet to recognize the user’s identity. The advantage of these wallets is that the user is able to use a unique identifier instead of traditional authentication methods. Moreover, the user’s digital identity can be authenticated once by the verified organizations and then used in different places. It can cause the user not to have to provide his/her ID card frequently for the organizations and do his/her aimed task easily using digital identity.

Intellectual Property

The mechanism of these types of assets is basically founded on the hash storage of related documents through Blockchain. These documents are stored via a timestamp to prove its existence and ownership. Some of these platforms allow the users to take permit for their tasks, and in case the other users need accessing to it, some amount of money will be deposited to the account of the person who has its intellectual property.

Financial Affairs, Trade, and Betting 

Some financial companies are investigating to use Blockchain in their programs in order for the users to be able to pay using cryptocurrencies. For example, NASDAQ has extensively invested in Blockchain to decrease stock management charges and cooperate with Chain to build a protocol for its financial network through it where it can store the information associated with the stocks. Some banks have recently used Ripple to manage fast international payments. Smart contracts are very much popular in online lotteries, too, since they assure the winners that they will certainly receive their reward.

Trading and Management of Supply Chain

This part is a division that has had most of the attentions and investments in Blockchain, and detecting fraudulent cases gets easier using Blockchain. The fields range from sports and music tickets to trading. More precious devices such automobile are using Blockchain in their supply chain management. In the market of luxurious items, Blockchain is used as a global general ledger of the diamond. Moreover, Blockchain is used to track and identify the place of these items. For example, Provenance applies Blockchain to make nutrient items traceable. Ambitious projects such as Profeth use Blockchain and smart contracts that include intelligence in the supply chain and create direct good-to-service exchange (without using money).


Blockchain is used to collect the people’s votes, and the transparency and accuracy of the results will be acceptable for the people applying it. The vote can be in the form of a small part of cryptocurrency transfer from the voter’s account to the account of the one voted for. Doing that, the votes can be observed on every device (e.g., computer, tablet, mobile, etc.) while you can be assured that the votes cannot be tampered with, and the voters’ identity is kept anonymous. (Fauzi, Wardhani, Muhasyah & Delina, 2019)
The above cases were some of the advantages applicable in different fields of industry and technology. Blockchain is also used in different fields, such as offering services, health, and IoT.

Evaluating the Appropriateness of Using Blockchain, Its Criticisms, and Disadvantages 

The data privacy and scalability are two cases of criticisms in Blockchain. The settings related to the privacy are limited since, in the Blockchain network, no user is superior to the other, and everyone can be added to this network and access to all the information of this network. In case of scalability, too, Blockchain used in most of the cases can currently manage the average of 3 to 20 transactions per second while famous payment services such as VISA can do approximately up to 1700 transactions. Therefore, Blockchain cannot meet all our needs alone. There have been not many articles in the practical requirements which are not implementable by Blockchain in the areas it is employed. We will address investigating the areas where Blockchain cannot be responsive for our needs through giving some examples.
The first thing should be carried out for the configuration of a Blockchain-based program is to assess the appropriateness of applying Blockchain in the needs of that program and see if using Blockchain in that programs limits us or not, and even there might be occasions where using Blockchain can bring about extravagant complexity. The investigations and statistics available in different industries give rise to seven questions that they themselves lead us to this question that “Is using Blockchain in the aimed program effective or not.”


The first issue is that “do we need multi-party?” Operations and transactions are usually managed among the parties by the middlemen. The supply chain is one of the examples which is composed of multi-party and complex parts, and related laws to this area own various demarcations and are offered in different forms depending on the place. Blockchain offers an unbiased infrastructure wherein no parties have written it. Therefore, Blockchain is suitable in scenarios where some are engaged, and it avoids empowering a party while it makes the working process faster and cheaper. 

Trustable Position

The second question is that “is there any need to a trustable position or not.” The trustable position is an identity in the system which can do a special operation or change the laws. Banks and the government are some cases in point. The problem is raised when having a trustable position can cause failure in a system. For example, if a trustable position faces a problem, all the users who gain access to that service will be influenced. Hence, using Blockchain is considered a benefit for the systems and mechanisms which don’t need a trustable position or a non-centralized trustable position. 
Using Blockchain is not for removing the trust; instead, the user takes their trust from a decentralized middleman and delegate it to the Blockchain itself. Therefore, in comparison to the other methods, the advantage of Blockchain is that it doesn’t need a central trustable position, so it is called a distributed trust. (Kuang Lo, Xu, Chiam & Lu, 2017)

Centralized Operations

The third question is that “is the operation of this program centralized or not?” In Blockchain-based systems which use smart contracts, performing system operation for the smart contracts is more difficult than normal distributed systems. It is because the smart contracts include a code that makes legal the interactions between two trustless parties. However, it is not implementable for a system that needs a centralized operation, and it cannot meet the needs of such a system. Blockchain-based systems act more like diplomacy than traditional risk management, which always existed before.

Data Transparency or Privacy

The fourth question is that “is data transparency more important for us than the data privacy?”. Blockchain creates an unbiased platform where all the participants can observe the published data. Therefore, all valid transactions are observable for all users. For instance, the miners can see if the account of the person who has done the transaction is of enough validity to do the transaction or not. Or in the smart contracts, the users can draw the contract in a way that they are allowed to examine it whenever they want. The data encryption before their storage on the Blockchain network might increase privacy, but the high performance of the system influences transparency and undependable auditing.
Storing a hash of the data on the chain of blocks and not keeping the raw data on this chain can increase the privacy and performance, but it questions the Blockchain laws in distributed trust, so more transparency is opposite to the privacy.

Data Integrity

The fifth question is that “do we need to have the integrity of transactions’ record?” The data integrity is the main key to create an origin in the traditional transactions, which is used for tracing physical properties and their changes. In comparison to the other methods to achieve integrity, using Blockchain is costly. There are currently other methods that prove the data origin (like encryption and digital signature on the data). Using Blockchain is not economical for a system that currently has a mechanism to trace the data.

Data Immutability

The sixth question in this regard is that “is data immutability important or not?” In the economies whose service provider middlemen are not always trustful, using Blockchain results in many advantages. Connecting the blocks in a chain of encrypted hashes is followed by a type of data immutability. Attempt to change these data by the other nodes is quickly considered as an attack to the data integrity. It is good, but sometimes it can cause some problems. They might be raised in the real systems which work with Blockchain technology; for instance, the transactions under discussion, incorrect addresses, private key being lost or disclosed, the data entrance errors, unpredicted changes on not-tokenized assets in Blockchain and in some cases, if the judge identifies that something is illegal in Blockchain and should be deleted, all can volatile data immutability. The data immutability in Blockchain causes their acceptance to be lowered comparing to the other technologies, which are managed by a middleman organization and have the probability to push back.

High Performance 

The seventh question about it is that “is high performance needed or not?” While Blockchain doesn’t have high scalability now, this feature might change in the future, since this characteristic is not hereditary. Thanks to their meticulous design, the consortium, and personal Blockchains have much better performance than the public Blockchains. Blockchain is not suitable for big data. It is a hereditary feature of Blockchain since many nodes on the Blockchain network have stored all the data of this database, and high data volume causes redundancy. Currently, the solution is applied to solve this problem of Blockchain is that a large part of data is stored somewhere else and avoid redundancy of repetitive voluminous data on all the nodes. (Kuang Lo, Xu, Chiam & Lu, 2017)

Main Advantages of Blockchain

A report published by Greenwich Associates 2016 Blockchain Adoption Study in the Blockchain acceptability attitude survey reveals that most of the participants believe that Blockchain has been highly effective in decreasing the charges and have found it as its main advantage. The other advantages achieved in this attitude survey have been specified as the decrease in implementation time, risk decrease, creating more income opportunities, and the decrease of main charges. (Niranjanamurthy, Nithya & Jagannatha, 2018)
The Most Important Disadvantages of Blockchain
Some of the main disadvantages of Blockchain include:

Low Performance

Blockchain has weaker performance than other centralized databases. When a transaction is being done, Blockchain should carry out all the duties the other databases do. But it does three other tasks too:

Signature Authentication

Each transaction of Blockchain should be signed by the public and private keys. It is of high importance since the transactions are shared among the nodes in a peer-to-peer manner; otherwise, their origin will not be verifiable. This operation is complex, and it takes much time by the technologies we have now.

Consensus Mechanism

In a distributed database such as Blockchain, it should be assured that all the nodes reach the consensus. Depending on the used consensus mechanism, it might need big communications among the nodes. Although a centralized database should fight against interventions in transactions, these interventions occur much less frequently when they are managed in a centralized manner. 


It is not because of the performance of a single node; rather, all the calculations the Blockchain needs cause redundancy. In a centralized database, the transactions are processed once (or twice), but in the Blockchain network, these calculations should be done independently by every node in the network.

High Energy Consumption 

Miners of the Bitcoin Blockchain network are calculating 450 thousand trillion problems per second to give validity to the transactions and use many computers to carry it out. (Niranjanamurthy, Nithya & Jagannatha, 2018)

A Look at the Alternatives of Confronting with Blockchain Disadvantages

The truth is that Blockchain technology is changing like any other technology, and this change has found different dimensions because of being open-source. Through making communication in different networks, Blockchain might reflect different advantages and disadvantages, and using these various positive and negative dimensions; Blockchain structures can be updated to confront with different faults and problems. There are many methods to confront the scalability of Blockchain. One of the most well-known samples of such a solution is the development of the lightning network in Bitcoin. The lightning network was suggested as an alternative to solve the problem of scalability and the increase of the speed of Bitcoin transactions. This network can do the transactions out of the main chain and with much more speed to the extent that it can do fast payments in different locations with much fewer problems.
The lightning network has been generated on the current Blockchain of Bitcoin, and it is suggested as the secondary solution. Such solutions act semi-independently like smart contracts that enter the primary level, i.e., Blockchain.
In fact, what is primarily suggested as the alternatives to confront with Blockchain's disadvantages is updating secondary solutions and combining it with Blockchain technology. From the one hand, many ideas such the combination of artificial intelligence and Blockchain technology are suggested to manage it better and decrease the disadvantages, but considering the youngness of Blockchain technology, it can be expected that the number of practical alternatives will increase to decrease its disadvantages.

Final Overview 

Blockchain is an adventive technology that has been successful in making big changes in the technologies of the world in its short lifespan. Variable advantages of Blockchain and its complex verification mechanisms have turned this technology into an appropriate choice to develop the world’s valid cryptocurrencies. The application of Blockchain in the fields such commerce and supply chain management, intellectual property, financial and banking affairs, voting, and medical systems are developing day by day.
While Blockchain can create innovation in many field, it should not be considered as a magic bullet; its acceptance should rather be cautious and dependent on the field supposed by the company and its purposes. We have attempted to investigate the application of Blockchain in different conditions and areas to the extent possible in the present article, and as you have understood, Blockchain is not necessarily responsive to the needs of any system. All in all, given various applications of this technology and its nature, practical alternatives are expected to be created for its infrastructural development and programming to the extent that it will be able to create an appropriate solution to cope with these disadvantages. 


Fauzi, I., Wardhani, R., Muhasyah, S. & Delina, M. (2019) The study of blockchain technology in the election system, AIP Conference Proceedings, November 2019, Available from: Researchgate [7 November 2019].
Gatteschi, V., Lamberti, F., Demartini, C., Pranteda., C & Santamaría, V. (2018) To Blockchain or Not to Blockchain: That Is the Question, IT Professional, Volume: 20, Issue: 2, pp. 32-74, Mar./Apr, 2018.
Kuang Lo, S., Xu, X., Chiam, Y. & Chiam, Q. (2017) Evaluating Suitability of Applying Blockchain, 22nd International Conference on Engineering of Complex Computer Systems (ICECCS), Nov. 2017, Available from: IEEE [6 November 2019].
Niranjanamurthy, M., Nithya, B. & Jagannatha, S. (2018) Analysis of Blockchain technology: pros, cons and SWOT, Cluster Computing, Volume: 21, pp. 1–15, March, 2018.

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