The negatives of faction are life are exactly what the benefits suggest. No matter if you are unfactioned or if your faction is not in power you will find it more difficult to achieve your goal within the character building spectrum.

This introduces another dynamic (token wars) that can be either positive or negative. It's interpretation is within the eyes of the beholder. Token wars occur when one person or faction trys to stack a single faction in his/her or their favor and another faction becomes preturbed and takes action against the aggressors.

I will say there is a happy balance that can be achieved, however it is seldom the case that players are willing to agree as a whole on one direction or the other.

This benefit of power can be taken a step further as well as the desire for blood (see "Power up your faction!").

Another negative is that NPC "Soldiers" that "protect" the various flags through out the land are able to attack you as well.