Public Blockchain Drawbacks for Big Businesses
- Public Blockchains & Big Businesses
Public blockchains are decentralized blockchains that are used by cryptocurrencies. They are completely secure from all threats as there is no single point of failure. For the approval of transactions and the creation of a new block, all the nodes on the network are required to participate. The cryptographic hash function helps in ensuring the authenticity of the transactions. The data once stored in the blocks cannot be edited or deleted. The consensus mechanism used by public blockchains requires all the nodes to work collectively for the creation of new blocks and validate transactions. If the nodes are not able to come to a consensus on the validity of the transaction, then no block gets added to the blockchain.
Public Blockchains & Big Businesses
There are certain features of public blockchain that make it unsuited for Big Businesses. These features are:
Scalability: For the validation of the transaction, participation of each node is a must. This results in slow transactions and low transaction throughput. Big organizations like Visa cannot implement public blockchains because they have to process the transactions instantaneously.
Consensus mechanism implemented: The consensus mechanism implemented in public blockchains is POW (proof-of-work) consensus algorithm, which provides complete security. This consensus mechanism uses a mining process, in which nodes are working to find the cryptographic hash of the previous block, to create a new block. Without the previous block hash, a new block couldn’t be created. This entire process requires huge computing power and is an expensive process. Huge cost and high computational power associated with public blockchains make it impractical in the large business context.
Sensitive information will be accessed by everyone: In public blockchains, all the nodes on the network have access to all the information in the database. Big businesses can’t afford this to happen. For example, amazon can’t have everyone gain access to the personal information of its users, especially their financial information.
Absence of proper governance: Big businesses require technologies that are well-governed, which is not the case in blockchain technology.
Smart contracts: Smart contracts are code pieces that cannot be changed and their outcome is irreversible. So they must be fully verified before they are implemented. Verifying smart contracts on Ethereum Virtual Machine (EVM) can be very difficult. Big businesses can’t afford to deploy smart contracts that are faulty and unchangeable and suffer the consequences later, as they cannot be reversed.
Information is stored on each node: Complete information is stored on all the nodes on the public blockchain for an indefinite period. This may cause heavy storage constraints. Big business applications can’t afford to have such high data redundancy.
Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency.
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