Five Main Principles Behind Blockchain Technology Part 2

Disadvantages of decentralization


The main disadvantages of decentralization of blockchain networks are absence of customer service for regular users and the existence of forks.


Absence of customer service on public blockchains

Customer service does not exist on public blockchains such as Bitcoin and Ethereum because these networks do not have a central authority that runs them. Practically speaking, this means if you know very little about computers and would like to use Bitcoin or Ether to send funds, there is no phone number you can call to get help, no email support, no chat support and so on.

At the same time, this doesn’t mean that you can’t get help. You can hire someone yourself, but this will not be a party that represents one of the networks officially in the way, for instance, an Apple employee at an Apple store represents the company.

This being said, a private blockchain network could have its own support, but it will most likely not be free because somebody will be paying for the support. For example, if a number of banks were to agree to start using a blockchain to transact with one another, they would easily create a support department.

The issue with that is what many public blockchains try to figure out today, which is the line between decentralization and every user having the same rights and centralization, which would inevitably lead to some users and parties having more access and being able to make decisions about the network.

For instance, if some organization were to run a support center for a blockchain, the fact that the organization is running a support center could easily lead to the centralization of power in the hands of the organization. Its support agents could start telling users to do things in a certain way, to go online at certain times, and so on. All of these actions could potentially influence what happens on a blockchain network and make the network depend on the party providing customer service.


Freedom and agreements on blockchain networks

The next big disadvantage of decentralization is that users on public blockchain networks do not have to agree with each other or do anything. For example, on the Bitcoin blockchain users do not have to send transactions in Bitcoin to each other.

The network is not a bank. When you live in a certain country, businesses and organizations in that country typically transact in just one currency. All their systems work in that currency, including cash counting, accounting, and tax reporting. If you go to a coffee shop in the United States and try to pay, for instance, with a Swiss Franc bill, employees at the coffee shop will not accept your money. They have no space for other currencies in their cash registers and they can’t enter the data about this money into the software that they use at the store because the default currency of the software is the United States dollar.

The employees will tell you to go to a bank and to exchange your Swiss Francs into United States dollars and then pay for your coffee with United States dollars, meaning that paying with United States Dollars is often the only way you can pay for products and services in the United States. This is simply not true about cryptocurrencies. There is hardly a party in the world today that accepts payments only in one cryptocurrency. Even conferences on cryptocurrencies accept payments in a variety of cryptocurrencies in addition to regular money such as the United States dollars.

In January of 2018, a Miami conference about Bitcoin has become known for stopping accepting payments in Bitcoin. The organizers of the conference have simply decided that transaction fees were too high, confirmation times were too long and dealing with payments in Bitcoin was too much hassle for them.

The freedom on blockchain networks such as Bitcoin isn’t just about freedom to participate or not to participate in transactions. It is about everything. Users can choose when to send funds and in what amounts. They can split the funds between different wallets and addresses. They can choose whether to include a transaction fee or not include a fee. Miners on the network are also free to include or not include a transaction into a block that they are about to create. The reason the system works is because all parties have incentives that they are interested in getting and the technology has a high level of security, preventing malicious players from successfully executing attacks.