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Disadvantages: Proof of Work Consensus Algorithm Bitcoin

Blockchain networks are vulnerable to 51% attacks if over 50% of the network's hashing power is controlled by a single entity. While theoretically possible, a successful 51% attack on Bitcoin is unlikely due to increased security as the network grows larger. Modifying earlier blockchain data would require immense computing power. Once data is added to a blockchain, it is very difficult to modify, often requiring abandoning the existing chain and starting a new one. Blockchain uses private keys to give users ownership over digital assets, but losing a private key results in the permanent loss of the associated funds. Proof of Work blockchains are inefficient since the work of all but one miner each round is wasted, consuming large amounts of energy. Blockchain

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Atta Ur Rahman Afridi
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81 views2 pages

Disadvantages: Proof of Work Consensus Algorithm Bitcoin

Blockchain networks are vulnerable to 51% attacks if over 50% of the network's hashing power is controlled by a single entity. While theoretically possible, a successful 51% attack on Bitcoin is unlikely due to increased security as the network grows larger. Modifying earlier blockchain data would require immense computing power. Once data is added to a blockchain, it is very difficult to modify, often requiring abandoning the existing chain and starting a new one. Blockchain uses private keys to give users ownership over digital assets, but losing a private key results in the permanent loss of the associated funds. Proof of Work blockchains are inefficient since the work of all but one miner each round is wasted, consuming large amounts of energy. Blockchain

Uploaded by

Atta Ur Rahman Afridi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Disadvantages

51% Attacks

The Proof of Work consensus algorithm that protects the Bitcoin blockchain has proven
to be very efficient over the years. However, there are a few potential attacks that can
be performed against blockchain networks and 51% attacks are among the most
discussed. Such an attack may happen if one entity manages to control more than 50%
of the network hashing power, which would eventually allow them to disrupt the network
by intentionally excluding or modifying the ordering of transactions.

Despite being theoretically possible, there was never a successful 51% attack on the
Bitcoin blockchain. As the network grows larger the security increases and it is quite
unlikely that miners will invest large amounts of money and resources to attack Bitcoin
as they are better rewarded for acting honestly. Other than that, a successful 51%
attack would only be able to modify the most recent transactions for a short period of
time because blocks are linked through cryptographic proofs (changing older blocks
would require intangible levels of computing power). Also, the Bitcoin blockchain is very
resilient and would quickly adapt as a response to an attack.

Data modification

Another downside of blockchain systems is that once data has been added to the
blockchain it is very difficult to modify it. While stability is one of blockchain’s
advantages, it is not always good. Changing blockchain data or code is usually very
demanding and often requires a hard fork, where one chain is abandoned, and a new
one is taken up.

Private keys

Blockchain uses public-key (or asymmetric) cryptography to give users ownership over
their cryptocurrency units (or any other blockchain data). Each blockchain address has
a corresponding private key. While the address can be shared, the private key should
be kept secret. Users need their private key to access their funds, meaning that they act
as their own bank. If a user loses their private key, the money is effectively lost, and
there is nothing they can do about it.
Inefficient

Blockchains, especially those using Proof of Work, are highly inefficient. Since mining is
highly competitive and there is just one winner every ten minutes, the work of every
other miner is wasted. As miners are continually trying to increase their computational
power, so they have a greater chance of finding a valid block hash, the resources used
by the Bitcoin network has increased significantly in the last few years, and it currently
consumes more energy than many countries, such as Denmark, Ireland, and Nigeria.

Storage

Blockchain ledgers can grow very large over time. The Bitcoin blockchain currently
requires around 200 GB of storage. The current growth in blockchain size appears to be
outstripping the growth in hard drives and the network risks losing nodes if the ledger
becomes too large for individuals to download and store.

Closing thoughts

Despite the downsides, blockchain technology presents some unique advantages, and
it is definitely here to stay. We still have a long road to mainstream adoption, but many
industries are getting to grips with the advantages and disadvantages of blockchain
systems. The next few years will likely see businesses and governments experimenting
with new applications to find out where blockchain technology adds the most value.

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