Though it is true that the Blockchain technology can change the world profoundly in many ways, it doesn’t mean that it is the 'cure-all' for all the problems in the world.
In this short guide, you will discover 4 major problems about Blockchain you should know.
Let's get started…
With the way Blockchain is currently being used, it has an environmental cost.
Encryption is required before Blockchain can provide its security and establish agreement over a distributed network. Hence, complex algorithms must be run before a user can have the permission to write to the chain. The running of this complex algorithms requires lots of computing power.
This has a cost. For example, it was reported in 2017 that bitcoin (the most widely known application of the Blockchain technology) requires energy that can power 159 of the world's nations to keep the network of its computing power running.
Though businesses that makes use of the Blockchain technology on a smaller scale will only need a small fraction of that, the environmental implications and energy costs of using Blockchain cannot be totally ignored.
One example of the deployment of this technology on a smaller scale is the use of the technology to monitor and record business activity securely.
This is not only peculiar to bitcoin but to every other value-based Blockchain network.
Most of those investing in Bitcoin and other Cryptocurrencies have found out that the cryptocurrency environment is highly volatile. Since there are no regulations in place, it is common for scams and market manipulation to take place.
For example, it was recently proven that Onecoin is a Ponzi scheme.
Yet there were those who lost millions investing in it because they believe it is going to become the next “Bitcoin”. How sad!
Most innovators (some of whom are scammers) in most sections of the tech industry have taken advantage of the lack of legislation in this industry to exploit 'investors' who do not want to miss out on the next big thing.
Another disadvantage of the lack of legislation is that there is a big chance that you could lose your investment even if you choose to invest in Bitcoin, Ether or Litecoin which are the relatively established coins that are available.
For example, the exchange or online wallet where you keep your coins can be hacked, abscond with your coins, or cease to be in operation due to government regulations.
If you can understand the encryption and the distributed ledgering behind the Blockchain, you will appreciate the potential revolution its applications can bring.
However, those who have little knowledge about how it works will not find it useful and hence, may not appreciate the applications that can be derived from it.
For example, when you read most articles or guides, they are pitching the fact that the use of Blockchain will eliminate the need for middle-man activities in the financial services industry.
To most people, banks have already accomplished this without the users paying exorbitant fees for such services.
This is the reason why most people started aligning towards the use of bitcoin after the financial crisis of 2008. The media and the public became dissatisfied with the established financial institutions and instruments.
Though there are no reasons to think there would be a repeat of such crisis most people just want to be very careful. Hence, they are advocating for the rebuilding of the financial services sector from scratch.
Most people will prefer to remain ignorant of Blockchain until there are global events that can make them change their minds.
When compared to the common methods of making payments, for example, the use of cash or debit cards, bitcoin transactions take time before they can be finalized.
Hence, it will not be possible to use it bitcoin to make payments for some specific services. For example, payment for coffee unless the vendor is willing to take the risk.
These time consuming transactions can be extended to the interactions in an IoT environment.
As the chains grow in size with more computers writing to the network, they can become slower and more difficult to manage.
It is expected that this will be solved with time as more progress is made in the field of engineering.
If these issues are properly taken care of in the future, the evolution of Blockchain technology can indeed become revolutionary.