Advantages
- Transparency: Provides a public ledger for easy verification and accountability.
- Security: Uses cryptographic protection and decentralization to prevent tampering.
- Decentralization: Eliminates intermediaries by enabling peer-to-peer transactions.
- Efficiency: Automates processes with smart contracts and reduces transaction time.
- Cost Savings: Lowers transaction fees and operational expenses.
- Accessibility: Facilitates borderless, 24/7 transactions for underbanked populations.
- Traceability: Enhances supply chain tracking and prevents counterfeiting.
- Trust: Builds confidence with tamper-proof and consensus-driven systems.
- Data Management: Provides secure, decentralized storage and ownership.
- Innovation: Supports new business models like DeFi and tokenization.
Concerns
- Blockchain technology is expensive to initially put it in place.
- The massive usage of energy for the functioning of blockchain.
- Safeguarding the privacy of individuals and companies as blockchains are usually open ledgers for everyone to see.
- Knowledge of the benefits of distributed ledger technology is still limited.
- If automated risk management, smart contracts, and similar tools are deployed across a network, cascades of rapid and hard-to-control obligations and liquidity flows could propagate across a network.
- This interdependence will likely call for creative organizational thinking to address the need for governance and strong risk management