The 6 Most Serious Issues With Blockchain Technology

 Is blockchain technology truly the greatest option for people looking for complete transparency?

As promising as blockchain technology's internationalization appears, it isn't necessarily the panacea for all of our commercial woes. Despite the fact that Bitcoin is a household phrase and blockchain is ready to permeate every business imaginable, there remain challenges to blockchain adoption.

The 6 Most Serious Issues With Blockchain Technology

What are the drawbacks of blockchain technology? What barriers to blockchain adoption are there, and how may they be overcome?

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What Is Blockchain Technology?

The first term that comes to mind when we think about blockchain is Bitcoin, and most of us translate blockchain to cryptocurrency.

However, they are two distinct things. The system is blockchain, and bitcoin is a product that operates on it.

This system's structure is adequately characterized by its name. Its most important component is a series of blocks that store data in chronological sequence. It is a distributed ledger technology (DLT), which implies that the chain is recorded in every node linked to the blockchain, rather than in a single central device.

A blockchain is just a network of nodes. Nodes are devices that use the software to connect to the blockchain. Every transaction or data exchange within the blockchain is validated by nodes. Furthermore, most public blockchains allow anybody to establish and run a node, resulting in a decentralized and transparent system.

While bitcoin is the most well-known use of blockchain, it is not restricted to that. Some have created blockchains that can distribute films, photos, papers, currencies, and a variety of other types of data.

The system as a whole makes it difficult for hackers to falsify transactions. If they don't want the differences in their connections to be visible, they'll have to edit not just the relevant block recorded in every node in the blockchain independently, but also the subsequent blocks in the chain (or rejected entirely).

What could possibly go wrong?

As it turns out, quite a bit!

6 Consequences of Blockchain Technology

The 6 Most Serious Issues With Blockchain Technology

Blockchain systems have flaws in a variety of areas, making widespread adoption a long shot. We'll guide you through at least six distinct blockchain concerns you may not have recognized.

1. Safety and security

Blockchains are only as secure as their weakest link, no matter how secure they look. For example, someone just needs access to one node in an exclusive blockchain to have access to data shared inside it.

That implies the device in a blockchain that is the simplest to attack is a danger to the entire blockchain's privacy. Unfortunately, this isn't the only issue with blockchain technology.

While forging a transaction on a blockchain is practically hard, it is feasible to have a fraudulent transaction accepted.

Identification Proof

Blockchains are a really democratic technology. To achieve an agreement, they employ a variety of voting techniques. Each node with an identity receives a vote in this situation. The majority has the upper hand! Proof of identity consensus methods include flaws, such as excluding minorities or influencing smaller blockchain networks.

It's simpler for gangs of criminals to enter a blockchain using a variety of gadgets, allowing them to purchase more votes.

They can approve any transaction once they have formed a majority.

Proof Of Stake (PoS) is a term that refers to a

This one is about the blockchain's stakeholders. The value of your vote is related to how much of a stake you have in a blockchain. That is, if you own a majority of the assets on a blockchain, you have complete control!

When a group of people purchases more than half of the assets on a blockchain, the blockchain is said to be under their control.

A 51 percent attack may be used against both the proof of identity and proof of stake procedures.

In a minute, we'll discuss the third way, proof of work. Let's speak about how openness might backfire for the time being.

2. Discretion

The introduction of blockchain technology into supply chains has sparked a lot of debate. It appears to be a fantastic concept! Making supply chains transparent, after all, can provide everyone the closure they need to make ethical decisions.

However, in a business setting, public blockchain (the most common kind) isn't necessarily a smart choice. Why? Because as a supply chain gets more open, the data of all customers and partners working with that organization will become more transparent as well.

Complete transparency isn't desirable in a business setting since it allows participants to observe what each other is doing in real time.

There are private blockchains that can prevent members from seeing particular transactions, but they come with their own set of drawbacks. A private blockchain isn't fully decentralized since it might limit who can join as a node, lowering public trust in the product.

Customers do not want their data to be shared with all firms in supply chains, and businesses do not want their intellectual property, secrets, or plans to be shared with their competitors.

3. The capacity to scale

A blockchain becomes increasingly susceptible as it grows in size. If that isn't enough to persuade you, there is still more to discuss before you decide to implement blockchain in your company.

Blockchains are difficult to grow because of their redundancy. From the genesis block to the most current transaction, every device in your network must have a copy of every transaction. That's hundreds of duplicates of the same information!

It necessitates huge storage, and the larger the blockchain, the more processing power the nodes will demand.

Even if you have all of your digital, software, and hardware requirements satisfied, it will be nearly impossible to regulate your blockchain.

4. Rules and regulations

Decentralization of authority means that there is no one authority in the network that can enforce law and order. There are no moderators, leaders, or even a governing body!

Not to mention the fact that smart contracts (contracts created on a blockchain) are not legally recognized as meaningful agreements or evidence in most jurisdictions.

Furthermore, which laws should apply to smart contracts, agreements, transactions, and cases, given that each user might be from a different nation and blockchain transcends all borders?

When it comes to creating blockchain-based goods on diverse platforms, the lack of common standards creates weaknesses and obstacles for developers.

5. Transaction Processing Time

The unresolved issue of slow transaction speeds is emerging as a fundamental barrier to blockchain implementation in real-world applications. Because blockchain is decentralized, each transaction must be confirmed by the nodes before being approved as a block. Trust is placed in a central controlling authority (government or bank) in centralized systems, allowing them to perform millions of transactions every day.

Consider Bitcoin's transaction speed while dealing with companies like Visa. Bitcoin can only guarantee 4.6 transactions per second at the moment. Visa, on the other hand, processes an average of 1,736 transactions per second (calculations based on the official claim of 150 million transactions per day).

Several initiatives and businesses are striving to improve transaction speeds on the blockchain, but all of these methods have drawbacks.

6. Consumption of energy

Any centralized system consumes more energy than blockchain technology. Their redundancy not only causes them to consume more power than a typical centralized cloud-based system, but their transaction validation mechanism also plays a significant role.

For starters, they need far more storage than any other system. The number of nodes added to a blockchain multiplies the amount of power required. Each node stores and processes almost as much data as any other system's central body.

But it isn't even our primary issue. Remember how we were going to discuss the third way of validation? Its operation necessitates a significant amount of resources.

Proof of Work 

Every gadget has the same weight when it comes to proving one's identification. When it comes to stakeholder proof, the biggest players win. Proof of labor, on the other hand, necessitates effort on the part of the users and their equipment.

When a miner utilizes proof of work to validate a transaction, they are presented with a difficult mathematical issue that takes a lot of computing power to solve.

The difficult mathematical challenge is more concerned with confirming the transaction's hash. Why is it so difficult? Because each transaction merges a hash with another hash.

To ensure that a transaction is genuine, one must follow the hash and its history back to its beginning. Miners of cryptocurrencies solve difficult algorithms and hash matches in exchange for a cryptocurrency incentive for each block they confirm.

On a blockchain, as the number of competitor nodes grows, there is a competition for greater computer power, which requires more energy. Because only one node wins the race to confirm the next block, this nuanced sophisticated confirmation process is incredibly wasteful.

Is Blockchain the Right Option for You?

The 6 Most Serious Issues With Blockchain Technology

Blockchain is a distributed ledger technology that aims to create decentralized and transparent systems. It may appear to be a safe, exclusive, democratic, and nerdy hipster's dream, but it is far from perfect.

Wait until your medical records are housed in a blockchain-based medical institution if you think blockchain's strength is transparency.

You won't be able to grow your blockchain without depleting your resources, and you won't be able to govern it because there are no standard regulations in place. On court, data and proofs maintained in a blockchain aren't even deemed significant.

When it comes to a Proof of Work blockchain, you can save anything but electricity. Unless your previous system was an old-school waste of paper and fuel, switching from a centralized system to a blockchain will only hurt the environment.


Freelance writer with a passion for EarlyInfo Website. Keeping up with the latest news, pondering on the essence of life, and thinking about new business opportunities. Most productive when Drink Coffee.

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