Blockchain has become a buzzword, the technological hope of individuals that promote a profound transformation in the financial, economic, social, and political health sectors. However, are these claims exaggerated? Can blockchain achieve its adoption and deliver on what it promises?
All new technology goes through a stage of excessive optimism during its development stage, since its challenges are being discovered on the progress of implementation - after decades in most cases. This is the current case of blockchains, which still has different barriers to overcome before providing a large number of solutions attributed to it.
1. Inefficient Design
Despite the benefits offered by blockchains, its design lacks several technological attributes that make it little accessible to both developers and users. With few exceptions, blockchain applications and cryptocurrency wallets are not friendly enough for the average user. Certain specific computer skills are still required to use this technology properly.
Due to its experimental stage, there are severe defects or errors in the code that can be exploited by hackers to attack the systems, steal information, and even money. This problem has been evident in the EthereumDApps. While it is true that the public blockchains developers work tirelessly to solve these limitations, they are not even partially resolved.
2. Relationship with criminal activities
Almost as an urban legend, a series of myths, mostly false, have been created around the use of cryptocurrencies for illegal activities and money laundering. Many claims, erroneously, that bitcoin and other cryptocurrency transactions are anonymous, when there is nothing farther from reality.
Blockchain allows auditing transactions in real-time, and in a public way, it is possible to identify the sender and the receiver with relative difficulty. Still, in any case, it can be done. In this sense, it is convenient to talk about pseudo-anonymity instead of anonymity. Are cryptocurrencies adequate to launder assets and commit crimes? The answer is NO. Cash fiat money will continue to be preferred.
Despite the above, the fact that it relates cryptocurrencies
to criminal activities seriously affects its reputation, impeding its legitimacy and adoption. No one wants to be related to the crime.
Blockchains work very well for a small number of users. What would happen when you intend to carry out an extensive use?
We have already seen the severe limitations regarding the speed of data processing of Bitcoin and Ethereum - 7 and 15 transactions per second, respectively, versus more than 2,000 in the Visa network - during the last months of 2017. When the number of users increases in the network, the transactions take longer to confirm, and the value of the rates increases dramatically. Transactions may take days to validate.
The challenge is that blockchain should manage to solve its serious the scalability problems related to increasing the speed of transactions and decreasing the cost related to the use of its services.
4. Energy Consumption
The main blockchain use the Proof of Work (PoW) as a consensus mechanism
. While this confers extreme security to the network, it is no less true that miners consume large amounts of energy to keep distributed computer networks running.
According to Digiconomist, currently, the Bitcoin blockchain consumes as much electricity (44.83 TWh) as Iraq, a country of 39 million inhabitants. Analysts and blockchain developers discuss using other consensus algorithms that consume much less energy such as PoS, DPoS, PoA, PoET, PoC, and so on, replacing the expensive PoW.
As we commented previously, contrary to what is thought, blockchain is not an anonymous network that protects the privacy of its users. All transactions that are recorded in this public ledger can be viewed by anyone regardless of location. Public blockchains have sacrificed privacy in the name of transparency, honesty, and trust.
However, it is obvious that organizations cannot function properly without privacy, even neglecting the management of their users' information can have serious legal consequences. The EU General Data Protection Regulation (GDPR), approved on May 25, 2018, is a reference in this regard.
In general terms, with certain exceptions, there are no worldwide regulations that establish the rules of the game to which the crypto world must adhere. The premature arrival of regulations can kill innovation, but the absence of these can lend itself to unscrupulous people to do their own thing and harm many unsuspecting people.
Although security is one of the main attributes of this technology, thanks to cryptography and distributed networks, it cannot be denied that there are still serious inconveniences about the security of these networks.
There are still many flaws in the codes that allow 51% of attacks in which hackers can take control of the network. Sometimes ago, Vertcoin was the victim of this type of attack. Also, remember the security flaws of Ethereum's smart contracts and decentralized applications
8. Lack of qualified personnel
Leaving aside the technical limitations of hardware and software, we find that there is a significant shortage of personnel with sufficient skills to develop and manage a blockchain. This is mainly because this technology is relatively new.
We are sure that this reality will change over the next few years. The demand for qualified personnel is enormous. Therefore, it is costly to get their services, representing an important factor that limits access to this technology.
9. Public perception
The vast majority of people are not yet aware of the existence and potential offered by this technology. If we want the blockchain to succeed, it must be gaining acceptance. Although this technology is up-and-coming, not enough effort has been made to attract users.
There are confusing ideas about blockchain and cryptocurrencies. It is thought that this technology is reduced to cryptocurrencies or that it has to do with multi-levels, Ponzi, or scams. Before general adoption is possible, the public must understand what the differences are between blockchain and cryptocurrencies, as well as destroy many unfounded myths by those who are not interested in developing this technology.
It seems unquestionable that the blockchain is here to stay and that it will inevitably play a fundamental role in many of the sectors of human activity. However, this fact is still a long way from coming true. We will see what happens in the next ten years. Back