What are the disadvantages of blockchain

By Dileep Seinberg

Most blockchains are designed as decentralized databases that act as distributed digital ledgers. These blockchain ledgers store data in chronological blocks linked by cryptographic proofs. Blockchain is out of its infancy and businesses can now use it in its mature form, beyond its obvious uses for financial institutions. Numerous industries have benefited from the development of blockchain technology, which increases security in untrusted environments.

Every coin has two sides. For example, blockchains require more storage space and are less effective than traditional centralized databases. Although blockchain technology has made remarkable strides since its inception, several challenges need to be resolved before blockchain can be widely adopted for daily transactions.

Scalability :

Unlike their centralized counterparts, blockchains have limited scalability. If you have used the Bitcoin network, you most likely know that the speed at which transactions are completed depends on network congestion. Simply put, the likelihood of a slowdown is higher as more people or nodes join the network. For example, there is a significant difference between Bitcoin and VISA transaction speeds. Currently, bitcoin transactions are capped at 4.6 per second. However, VISA is capable of 1,700 transactions per second. The solution is to transact beyond the blockchain and only use blockchain technology to store and capture data. There are also new ways to deal with scalability, e.g. B. Using blockchain solutions with different architectural designs or allowed networks.


Blockchain databases are stored persistently on all network nodes, which poses a storage problem. The amount of data that can be stored on a PC is limited, and as the volume of transactions increases, so does the size of the database. Blockchain ledgers have the potential to grow extremely large over time. The Bitcoin blockchain currently requires around 200 GB of storage space. Blockchains appear to be growing in size faster than hard drives, and the network could lose nodes if the ledger grows too large for users to download and store.

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Blockchain offers more security than other platforms. However, this does not mean that it is absolutely safe. There are several ways the blockchain network can be compromised, some of which are listed below:

1. In a 51% attack, network control is possible when an entity controls 51% of network nodes. You can then make changes to the ledger and duplicate it. This is possible in networks with controllable miners or nodes. As a result, 51% of attacks are less likely to occur on private networks and more likely to occur on public networks.

2. Another disadvantage of blockchain is double spending. The blockchain network uses Proof-of-Stake, Proof-of-Work, and others to prevent double spending. Double spending is only possible on networks vulnerable to a 51% attack.

3. During a DDoS attack, the nodes are flooded with requests for the same, which slows down or stops the network.

4. The blockchain’s cryptographic algorithm makes it insecure. Quantum algorithms or computers can crack cryptography. However, blockchain solutions now use cryptographic algorithms that are resistant to quantum computing.


Despite anonymity and encryption, all network nodes have access to data in a public blockchain. All users of the network can thus legitimately access this data. Similar to how websites typically use cookies and web trackers, transaction data is used to identify an individual within a network. Unfortunately, this shows that blockchain technology is not entirely secure.

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power consumption

Due to mining, the energy consumption of the blockchain is high. One of the factors that causes this is that as soon as a new node is created, it connects to every other node and creates a distributed, continuously updated ledger. Every blockchain solution works differently. Legitimate or private networks with fewer nodes do not have these problems. Since no universal agreement is required, they use consensus building techniques. However, the problem remains unsolved when using Bitcoin, the most popular blockchain network. Simply put, approved networks use less power than public networks.

Private Keys:

The ability of individuals to act as their bank is critical to the decentralization of blockchain technology. However, this raises another problem. Private keys are required to access any resource or data stored on the blockchain. It is important to note details of the private key obtained during wallet creation. Also, they need to make sure that no one else can access it. If a user loses the private key, they can no longer access the wallet. Blockchain’s dependence on its users is a limitation. This is a disadvantage as not all users are tech savvy which increases the chances of bugs.

data immutability

One of the main disadvantages of blockchain technology is the immutability of data. It benefits financial and supply chain systems. Immutability can only exist if network nodes are fairly distributed. A blockchain network is vulnerable when an entity owns at least half of the nodes. Another problem is that data once written cannot be erased. If someone uses a blockchain-based digital platform, they cannot delete their records.

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costs and implementation

There are significant upfront costs associated with implementing blockchain technology. Although most blockchain solutions are open source, investing in them is relatively expensive. Hiring developers, leading a team that excels in various aspects of blockchain technology, paying for a blockchain solution, and so on are all expenses. Also consider maintenance costs. Enterprise blockchain projects can cost well over a million dollars to implement. Therefore, companies like the concept of interoperability. Another disadvantage of blockchain technology is its lack of interoperability. There are different blockchain network types, each of which works differently and tries to address the DLT problem in a specific way. This leads to interoperability issues where these chains cannot communicate effectively. Interoperability remains an issue for both traditional and blockchain-based systems. New blockchain technologies offer superior solutions compared to previous blockchain technologies. For example, Ethereum has addressed the inefficiencies by moving to a more effective blockchain technology solution that allows for automation through smart contracts. It also implemented Proof-of-Stake (PoS) which is a bit more efficient than Proof-of-Work (PoW). Despite its downsides, blockchain technology offers some distinctive advantages and is undoubtedly here to stay. Blockchain fans and developers will no doubt find a way around these obstacles given the enticing benefits of the technology. We’re still a long way from widespread adoption, but businesses and governments will be actively experimenting with new applications of blockchain technology in the years to come.

The author is the founder and CEO of MuffinPay

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