Why Blockchain Won’t Rule the World Just Yet?
Blockchain stands as one of the most revolutionary technologies on earth since the invention of the Internet. It is essentially a very secure and distributed ledger or database. The technology solves the biggest issue humans have with each other in the digital world: trust.
Trust is a very difficult thing to establish especially when dealing with sensitive data. Even supposedly trusted institutions like the government and banks are generally not immune to screwing us over.
With people trusting global authorities less and less, Blockchain came in as a breath of fresh air. And beyond digital currency, the list of Blockchain technology benefits seems to be endless. It’s almost a given that we’ll be living in a Blockchain powered world sooner than later.
As is often the case with any new technology, adopting it can take quite a bit of time. And here are 5 reasons why with Blockchain, it might take quite a bit longer.
People Are Still Skeptical
The main problem with Blockchain is which keeps and manages everyone’s records. And it turns out, that makes most people very uncomfortable.
People tend to be nervous of the idea of having no one in charge. Take cryptocurrencies for example. If you somehow get duped or encounter fraud and you lose those precious Bitcoins, good luck with that. There’s no bank, customer service representative, or even government agency to run to. Lose cryptocurrencies, and you lose them forever.
Bitcoin’s negative publicity and reputation as the tool of choice for buying illegal stuff online doesn’t help blockchain’s case, either. In addition, most people really don’t understand the technical aspects of blockchain. As long as these fears are still in the public eye, blockchain won’t get much public acceptance.
As seen on blockchain thoughts, Internet Banking is today considerably mainstream whereas in 1990, it was not in sight. Over the last two decades, security and operational enhancements have made Internet banking a possibility. Same could apply to the blockchain years down the line.
It’s Difficult to Use
Blockchain is still a young development, and implementing it is relatively crude, compared to other more established technologies. In short, don’t expect an established knowledge base or manuals to walk you through. No ready plug and play platform here. You’re pretty much on your own. It needs quite a few years still to work out the kinks and make the technology more mature.
Moreover, blockchain is fundamentally a whole new way of doing things. It means, if you want to adopt the technology, you need to build (or rebuild) everything from scratch. For most companies, this is too expensive, time-consuming or disruptive to their operations. And it’s not like they are in any hurry to adopt blockchain right away: some are perfectly happy with their current storage structures.
Even using the technology itself isn’t quite straightforward. Doing a simple transaction, like sending someone some Ether coins, involves a lot of complicated steps. PayPal, in comparison, now has a link feature which enables anyone to pay you in a few clicks. If Blockchain hopes to become more mainstream, it needs to address this issue.
As of 2017, the cost of storing just 1 GB of data on the Ethereum network costs around $5.5 million. That’s a lot of money for just a small storage space. Same cost implication is of concern when processing transactions. A sender needs to make room for some gas when sending ether across otherwise the transactions might fail.
The Bitcoin Blockchain has its own ills with the Proof of Work concept. It requires that a miner must be the first to solve a cryptographic “puzzle”. The node has to essentially guess and keep on guessing until it gets the correct answer, at which point it also gets rewarded with coins. It is difficult for any one node to add unverified transactions on its own. It is this design that makes blockchain secure.
The downside is that all of that computing power consumes quite a lot of energy. While the energy observation is sometimes pooh-poohed as an exaggeration, the fact is that it is quite an issue.
There are some initiatives to reduce blockchain’s electricity footprint, like using other algorithms. The likes of DPOS-delegated proof of stake, Network Sharding, among others are attempts to mitigate the recurring question of energy-intensiveness.
The Problem with Regulation
Even during the early days of cryptocurrency and Blockchain, government regulation has always been its biggest hurdle. Cryptocurrency is so innovative and paradigm-breaking that current government and banking laws simply are not equipped to handle it.
And then, there is that conflict between the staunch cryptocurrency advocates and government entities. Cryptocurrency was established precisely because of distrust in the government, hence the idea of decentralization of currency. These advocates believe that government interference would be counterintuitive and beat the core purpose of blockchain and cryptocurrency.
But the government does have a point. Unregulated, the world of cryptocurrency can resemble the wild wild west: free but potentially dangerous. A way of protecting the general public against possible fraudulent cyptocurrencies is very much a valid concern.
Ultimately, there is no getting around it: regulation is a requirement if blockchain is to have mainstream adoption. The challenge is in having regulations that protect the consumers while at the same time allowing enough room for innovation.
As experts brainstorm around finding a balance, there is hope that a middle-ground will emerge sooner than later.
It is common for new technology to be slow during its early years. Internet connection back in the 90s would frustrate the hell out of today’s modern user. This is where blockchain technology currently is. Good news is, as the technology improves, so do will speed. But as it stands, blockchain is still painfully slow.
Bitcoin currently has a maximum speed of 7 transactions per second; in reality though, this figure is closer to 3-4 per second. Ethereum is a bit faster, at around 20 per second. In comparison, the credit card network Visa can handle upwards of 24,000 transactions per second. It is this slow speed that makes blockchain difficult to scale to size.
There has been a lot of focus, especially among crypto exchange platforms, on solving the problem of blockchain’s slow speed. One such initiative is the Lightning Network. It is a layer of code that sits atop the blockchain that helps facilitate faster and cheaper transactions. It’s promising, and can be the solution to blockchain’s woes.
Even with all these roadblocks, considerable effort is being put into improving blockchain’s performance, and the future’s looking brighter by the day. The key efforts are making blockchain transactions cheaper and faster, and making it compliant with regulation to build trust with the general public. With these in place, widespread adoption may soon follow suit.
But as it is with any new technology that is ahead of its time, all blockchain needs is one thing: time.
Exactly the same reason it is secure in the first place – the fact that it is decentralized. In this case, every computer (or node) in the network maintains a copy of the records. To tamper with a record, a hacker needs to change all copies on all nodes, which is almost impossible. There is no central entity,
Claire John is a crypto-enthusiast and tech blogger. She is a regular writer and more. Her passion for writing drives her to utilize her diverse skill set to develop unique content and create efficiency to enhance the reader experience. You can find her on LinkedIn and Twitter.