Disadvantages of Distributed Ledger Technology Explained

Blockchain technology perhaps the best known and the most principal example of DLT or distributed ledger technology and it is constantly lauded in blogs and articles, discussions and interviews. What people often seem to forget is that distributed ledger technologies, as wonderful as they might be, also come with a lot of flaws and failings. Today, you will have the disadvantages of distributed ledger technology explained to you, just to put things in perspective.

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Considering that distributed ledger technologies are not too old yet, and are still a part of a nascent and developing space, it is quite understandable that it still has some problems to take care of. Here is a quick look at some of its most enduring disadvantages.

51% Attack

The 51% attack is perhaps the most enduring concern that the distributed ledger technologies must routinely contend with.

The concept of these technologies is premised on the idea of decentralization. Since the ledger in question is spread out over a large number of nodes, it becomes decentralized so that no single entity could control it or affect it adversely.

However, the crucial problem that lies in this technology is the fact that if someone or some existing entity manages to amass a majority of the network’s capacity, then the network at large is in a risk of being overpowered.

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Costs of Transaction

Since the connected nodes are the ones who are expected to validate transactions and carry out the upkeep of a given DLT, network, the transaction costs tend to shoot up.

There is no such thing as a free lunch and these nodes prefer to validate those transactions first that offer some kind of an incentive.

The ones without incentive are taken care of later. As a result of this, the costs of transaction on the network naturally gets higher.

Slow Transaction Speed

Given that a large number of nodes are involved in clearing both incentivized and non-incentivized traffic, the transaction and data recording speed over these networks often tend to be woefully slow.

This is a major disadvantage in most distributed ledger technologies, as they try to reconcile the perspectives of multiple stakeholders within a single system.

Scalability Issues

Because of the high transaction costs and the rather low speeds, distributed ledger technologies often prove extremely difficult to scale or to work with on a much larger scale.

This is a limiting factor and a major disadvantage of trying to widely use distributed ledger technologies.

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