Blockchain technology has become one of the biggest buzzwords not only in the field of finance but also in technology. Blockchain proponents believe that the technology will revolutionize financial services as it functions without a central authority. The technology also stores data in a tamper-proof way which is an additional advantage of the technology. It is believed that the emerging blockchain technology will be beneficial for a number of industries beyond finance and technology, particularly for the industries which have to keep a huge trail of paper records such as healthcare, law, and real estate.
Though there are numerous benefits of the blockchain technology slow transaction speed and lack of standardization have slowed down the growth of blockchain. Some people even believe that the technology is over-hyped and there are certain issues with blockchain which the technology needs to overcome to see widespread adoption.
Issues with Blockchain Technology
Lack of Regulations
Lack of regulatory oversight has created a risky environment for users, and people also find crypto market extremely volatile. Because of lack of regulations scams and market manipulation has become common in blockchain and crypto world. There are countless scams which robbed millions from investors. Even if investors choose to stick to established coins like Bitcoin, Ether, etc. there are chances that the wallet or exchange where people keep their digital assets will be hacked or shut down by the governments because of their shady practices. These are the consequences of the lack of regulatory oversight.
Blockchain is like an accounting ledger, the difference is it records transactions across a vast network and it is decentralized in nature which means blockchain does not require any central authority to oversee it. Though the advocates of the blockchain technology believe that it is a huge advantage for tracking financial transaction and other data but there is a problem. According to a recent research conducted by Deloitte, decentralization makes blockchain slow. Some legacy transaction processing systems can process tens of thousands of transactions per second while blockchain can handle only a few transactions per second. Due to the complexity and distributed nature transactions on blockchain can take a while to process. In some cases, Bitcoin transactions also take several hours to finalize. Because of the poor performance of the blockchain, many observers do not consider blockchain to be viable for large scale applications.
Lack of Standardization
With the increasing popularity of blockchain, the numbers of blockchain players are also increasing at a rapid pace. As there is no standardization exist in the field of blockchain technology so it is becoming a matter of concern that these networks will be able to interact with each other. Lack of interoperability offers blockchain developers and coders freedom and IT department problems as the platforms cannot communicate without translation help. On coding site GitHub, there are over 6,500 active blockchain projects which use different platforms with different coding languages, consensus mechanisms, protocols, and privacy measures. Standardization in the blockchain industry can help the enterprises to collaborate on application development, share blockchain solutions, and validate proofs of concepts.
One of the most frequently noted criticisms of the Bitcoin blockchain is that it relies on intensive computing power which means it requires a lot of energy to run. To keep the network ticking over, miners use huge computing rigs with multiple serves. According to a research conducted by Elite Fixtures, it cost over $26,000 to mine just a single Bitcoin in South Korea and we all know that South Korea is one of the world’s largest markets for crypto trading. Though the Bitcoin miners get paid for their efforts the high cost could be a problem for the widespread adoption of the technology.
Though these issues can pose significant hurdles for the widespread penetration of blockchain technology but the developers are trying their best to resolve these issues. It is likely that blockchain technology will evolve in the coming years.