Pros.
1. Decentralization
Blockchain is based on peer-to-peer network technology for data storage, adopts distributed accounting and storage with no centralized hardware or governing body. All nodes have equal rights and obligations, so any node that stops working will not affect the operation of the system as a whole.
2. Collective Maintenance
The system is open. Only the private information of each transaction party is encrypted. The system is maintained by all the nodes with maintenance functions. Anyone can check the blockchain data and develop relative applications, so the data in the whole system is very transparent.
3. High Security
Once data has been verified and added to the blockchain, it is stored permanently. A chronologically recorded, tamper-evident and trusted database is generated, thereby limiting the possibility of unlawful behaviour. Blockchain data is therefore extremely stable and reliable
4. No Trust System Required
As the exchange of information between nodes follows a fixed algorithm, participants do not need to trust anyone. As the number of participating nodes increases, the security of the system increases instead. Therefore counterparties do not need to make each other trust themselves by disclosing their identity, which is very helpful for credit accumulation.
Cons.
1. Security Issues
A major feature of blockchain technology is that it is irreversible and unforgeable, but only if the private key is secure. The private key is generated and kept by the user, without the involvement of a third party. Once the private key is lost, it is impossible to do anything with the assets of the account. With the development of new computing technologies such as quantum computers, asymmetric encryption algorithms have a certain possibility of being broken in the future, which is a potential security threat to blockchain technology.
2. Delay in Data Validation
In financial blockchain, the time for data validation is relatively long. Taking Bitcoin as an example, the validity of the current generated transactions is affected by the network transmission, and each Bitcoin transaction does take about 10 minutes, and 6 confirmations would take an hour. Therefore there is a delay in the transaction data in the blockchain.
3. Regulation
The decentralised, autonomous nature of blockchain dilutes the concept of state regulation. However, all innovations need to comply with regulatory requirements. Regulation of blockchain in a way is to promote the commercial application of blockchain and provide better compliance protection. On the other hand, there is a lag in the establishment of laws and systems for this new technology by regulators, which may also ruin blockchain and needs to be in control.
Blockchain as a conceptual innovation can have a disruptive impact in specific areas. What needs to be done is to build on its strengths and use its weaknesses to make the best use of blockchain technology.