Blockchain

One of the advantages offered by the blockchain is its immutability, a feature that is secured via cryptography and a smart incentive system. The latter ensures that all participants in a network guarantee the legality of all transactions. Another positive aspect of the blockchain is that it is decentralised, a feature that protects it against manipulation and builds trust between the various users, who may not know each other well – or at all. It can provide a verifiable and auditable digital record of property rights or certificates of origin. Financial services could also be fundamentally re-structured using blockchain technology, as it does away with an intermediary service, making transactions faster, more economical and less error prone. Blockchain technology is transparent and the information stored on the chain is immutable, thus increasing legal certainty – a major advantage particularly in countries where a trusted or efficient central body is lacking. The fact that the blockchain – in conjunction with smart contracts and the Internet of Things – enables automation of review processes and validation certificates is widely seen as an opportunity.
The greatest disadvantage to the blockchain is the amount of energy it consumes. Some of the blockchain consensus mechanisms used to replace a single trusted authority require an enormous amount of processing power that is distributed across a large number of computers; this set-up consumes a massive amount of energy. An additional risk is related to the fact that users in public blockchains are anonymous, or that they use a pseudonym. This anonymity can be misused for criminal purposes. At the same time, all transactions that have ever been made can be tracked and viewed, meaning that as soon as the identity behind a pseudonym has been revealed, all transactions made under this particular pseudonym can be assigned to a specific individual. Because the entries are immutable, there is no longer a right to be forgotten – a right that is stipulated in data privacy rules. And despite the blockchain’s promise of greater transparency and collective decision-making, its complexity makes it entirely impenetrable to non-specialists. Lastly, there is a risk that the blockchain will largely remain a ‘solution without a problem’: to date, no ‘killer application’ has been developed and the blockchain has failed to live up to the expectations created by the hype surrounding the technology.