Cons of Distributed Ledger
- Immutability: Once a transaction is recorded on the distributed ledger, it cannot be changed or erased, ensuring the data’s integrity and accuracy. This is especially significant in sectors with centralized ledgers. DLT can be complex and difficult to understand, making it difficult to deploy and manage. It necessitates specialized technical knowledge and expertise, which might impede adoption.
- Scalability: DLT can struggle to scale to serve large-scale applications or networks, limiting its utility in some circumstances. As the number of nodes in the network rises, so does the complexity and time necessary to establish consensus, potentially slowing down the network.
- Energy Consumption: Because they rely on a large number of nodes to validate transactions, some DLT systems, such as blockchain, can be energy-intensive. This can be an environmental concern because the network requires a substantial amount of energy to maintain.
- Regulation: Because DLT is frequently decentralized and not controlled by a single body, it can be difficult to regulate. This can pose difficulties for authorities who must verify that the technology is used safely and securely.
- Privacy concerns: While DLT enables transparency, it can also bring privacy concerns. In other circumstances, the ledger’s transparency makes it difficult to protect sensitive information, which might be a risk in industries such as healthcare or finance.
Difference Between Centralized and Distributed Ledgers
The article focuses on discussing the differences between Centralized Ledger and Distributed Ledger.