What are the advantages of blockchain compared with traditional finance? (1) Detrust: Blockchain is immutable and can automate trusted transactions between counterparties that do not need to know each other, and transactions can only be executed if both parties meet procedural conditions. (2) Unstoppable: Once the conditions programmed into the Blockchain protocol are met, a transaction cannot be cancelled, changed, or stopped. It will be implemented and no institution, including banks, governments or third parties, can stop it. (3) immutable: records on the blockchain cannot be changed or tampered with, and bitcoin has never been hacked. A new trade block is added only after a complex mathematical problem has been solved and verified by a consensus mechanism. Each new block has a unique encryption key from the information of the previous block, and the key is added to a formula. (4) Decentralization: No one entity maintains the network. Unlike central banks, decisions on blockchain are made through consensus mechanisms. Decentralization is important because it ensures that people can easily access and structure transactions on the platform. (5) Low cost: In the traditional financial system, you have to pay a fee to a third party, like a bank, to be able to process the transaction. Blockchain eliminates these intermediaries and lowers fees. Some systems return the fee to the miner and the pledge node. (6) Peer-to-peer: Cryptocurrencies like Bitcoin allow you to send money directly to anyone, anywhere in the world, without the need for intermediaries like banks that charge transaction fees or handling fees. (7) Transparency: Public chains are open source software, and anyone can access them to view transactions and their source code. They can even use their code to build new applications and suggest improvements to the code in a consensus-building way that the blockchain system accepts or rejects. (8) Universal banking: Two billion people around the world have no bank account. Because anyone can access the blockchain to store money, it’s a great way to provide the financial services that banks can provide to people who don’t use banking services, avoiding the theft that happens when cash is held in the physical world. What are the drawbacks of blockchain? Public chains are not without their dangers and challenges. Here are the current top concerns: DEFI – Decentralized Finance – Decentralized Applications – DAPP 1. Blockchain networks like Bitcoin use a lot of electricity to verify transactions, which leads to an increased burden on the environment. Bitcoin consumes more electricity than a medium-sized European country, and bitcoin mining threatens China’s climate-change goals. No one is saying that making progress in reducing the carbon footprint shouldn’t be on the agenda, with some mines turning to renewable energy sources like solar panels and El Salvador’s president calling for a plan to mine bitcoin using geothermal energy (volcanoes). However, it is crucial to maintain a balanced perspective when considering costs, environmental impacts, and blockchain benefits. One of the most important strengths of blockchain and cryptocurrencies is also its greatest weakness. When you invest in a public open source blockchain by mining or buying cryptocurrency and storing it in your digital currency wallet (your wallet is like your bank account, where no one else has access to it and the password except you), only you have control over your money. Although public chains are more efficient than traditional banking systems, decentralization comes at the cost of scalability. In fact, trying to scale the blockchain network to global capacity is the root cause of the current low blockchain rates. As we’ve seen, Bitcoin and Ethereum can only handle at most 7 and 30 transactions per second respectively, while Visa can handle 24,000 transactions. [This article was compiled and published by qkljys123.]