The blockchain is still the leading buzzword in the tech world. Protagonists think it will revolutionize the financial sectors including real estate, healthcare, and law. The ability to work in a distributed environment with the tamper-proof facility is the core source behind all these hypes.
However, any new technology will always go through a hype stage. It takes a lot of time to get rid of all the challenges and use it to power the modern world. The blockchain is not different here. Although there are many possibilities, it will still take some time to get over all the challenges.
So, how many challenges does Blockchain technology have? Can it overcome all this and shine as a technological blessing?
We’ll cover all the Blockchain adoption challenges for your benefit. This way you’ll know just when it can indeed become mainstream.
So, let’s get started!
Why the Dilemma?
You would need to know how public and private keys work. After that, you can go through dozens of steps to obtain and use cryptocurrencies. Besides, only public channels can guarantee properties that can be unique and different from standard databases.
Immutability and resistance are two of the main problems they face. Also, the large-scale consensus is by far the two most important factors that encourage financial companies to embrace technology.
Unfortunately, the same public channels have many disadvantages regarding privacy and scalability. The lack of structured textbooks and standardized courses is also an obstacle. Transformation and change through the blockchain technology application are what we desire.
Misunderstanding the technical possibilities of the blockchain won’t do any good. Although, the lack of general awareness of what it does, is still currently one of the major obstacles to widespread acceptance. Many companies still do not understand what Blockchain is or what they can do.
However, they have heard of Bitcoin and even accept it as a means of payment. But they do not necessarily have to understand how it works or what the technology can do.
If we have to round-up all the pressing Blockchain adoption challenges, it would be a huge mess. Many people and companies do not have a deep understanding of technology and what it’s capable of doing. This may be very accurate since Blockchain itself comes from the digital currency of Bitcoin.
Now for the best part. We will discuss the ten blockchain adoption challenges that need to get addressed. Thus, before we adopt blockchain, we need to know about all the limitations it has.
Blockchain Adoption Challenges Infographic
Top Blockchain Adoption Challenges: What Are They?
Here is the list of the top 10 blockchain adoption challenges that are slowing down the system:
Inefficient Technological Design
Even though blockchain technology has a lot of perks, still it lacks in many technological ways. A coding flaw or loophole is one of the significant points in this.
Bitcoin was the frontier in this regard, but still, the whole system reeks of inefficient designing. Sure, Ethereum tried to cover up all the lackings of Bitcoin, but it’s still not enough.
Let’s take the decentralized application development for example. Ethereum allows developers to implement dApps based on their system. And to this date, there have been many dApps based on them.
However, most of them seem to have a matter of false coding and loopholes. Users can utilize these loopholes and hack into the system quickly. So, all that talk about security isn’t correctly working here.
If we can fix this blockchain adoption challenge, things will surely become more comfortable.
The Criminal Connection
The anonymous feature of the blockchain technology attracted not only experts but also criminal personals. Why? Well, the nature of the network is decentralized so that no one can know your true identity.
This is making bitcoin the primary target that is being used as a currency in the black market and the dark web.
Not a good thing to build up the reputation. This bad name is making many people think twice before looking into the whole system. Moreover, it’s natural for people wanting to stay away from any criminal association.
Criminals now use these cryptocurrencies to purchase limited illegal equipment and payment methods. They also ask cryptocurrencies in exchange as a ransom. The only way to cope up with this is to stop the criminal connection and for all for a better blockchain implementation.
Blockchains work fine for a small number of users. But what happens when a mass integration will take place? Ethereum and Bitcoin now have the highest number of users on the network and needless to say, they are having a hard time dealing with the situation.
When the user number increase on the network, the transitions take longer to process. As a result, the transactions cost higher than usual, and this also restricts more users on the network.
It can take even days to process the whole transaction. So, in the end, this blockchain adoption challenge is making the technology less and less lucrative.
Few of the blockchain technologies did show us a faster output, but they also slow down when more users log in the system.
So, this challenge needs to be dealt with pretty fast, as it’s making the whole technology kind of dull.
Energy consumption is another blockchain adoption challenge. Most of the blockchain technology follow bitcoins infrastructure and use Proof of Work as a consensus algorithm.
However, Proof of Work is not as great as it looks. To keep the system live it will need computational power. You probably heard about mining.
Mining will require you to solve complex equations using your computer. So, when you start mining, your PC will take more and more electricity to overcome this situation.
At present, miners are using 0.2% of the total electricity. If it keeps increasing then, miners will take more power than the world can provide by 2020. Thus, it now becomes one of the primary challenges of this network.
Many organizations are trying to avoid blockchain altogether just for this challenge. That’s why the situation needs to be under control. But how?
Well, blockchain can utilize other consensus methods to validate the transitions. Consensus algorithms that require very little energy to process.
This is the only way we can genuinely make blockchain technology a blessing again.
Blockchain and privacy don’t go really well with each other. The public ledger system fuels the system, so full privacy is not the first concern.
But can any organization function without privacy? Well, no. Many companies that work with privacy needs to have defined boundaries. Their consumers trust them with sensitive information. So, if they are all stored in a public ledger it won’t actually be private anymore now, would it?
That’s why it is necessary to change the registers to limit access to the data. Making it available for only the customers will be a solution here.
This is an essential requirement in the case of bitcoin and other cryptocurrencies. On the other hand, this raises some concerns for governments and companies. Governments and companies always need to protect and restrict access to their data for various reasons.
This means that blockchain technology won’t be able to work with sensitive information until anyone solves the problem.
Private or federated blockchain can work here. You would get limited access, and all your sensitive information would stay private as it should.
Many organizations are making blockchain technology as a means of transaction. You will see many products depended on this. But even now there aren’t any specific regulations about it. So, no one follows any specific rules when it comes to the blockchain.
Now, this is where the issue comes in. Although blockchain guarantees visibility as one of its benefits, still there is no security. You won’t know for sure if it will be safe for you or not. To get over this challenges, Government and extremely controlled sectors may need to create regulations for blockchain.
Security is another crucial topic here. We all know how every blockchain technology boasts about their security. But like any other technology blockchain also comes with a few security loops.
The 51% attack on the network is one of the security flaws of the network. In this attack, hackers can take over the network and exploit it in their way. They can even alter the transaction process and restrict other people from creating a block.
To deal with this, the protocol layer needs more security. We already saw some of its security loopholes by now. However, only a handful of scenarios have good protocols that can cope with this. So, no one knows whether they are safe to use for a long time.
Lack of Adequate Skill Sets
In addition to software and hardware, you must also find qualified personnel to manage blockchain technology. As you know, blockchain technology is relatively new and is still evolving. At the moment few people have the skills to support such technology.
On the other hand, the demand for this qualified staff is enormous. So if you want to hire skilled people, you’ll have to pay up large salaries. The right people will cost you.
Like any technological innovation, the blockchain will continue to evolve. Yes, there may be challenges, but they are not obstacles. Adopting new regulations and standards is a must. Before you know it, you are also considering using blockchain technology for your company. So, beware of the blockchain adoption challenges.
Blockchains Can Be Slow
The blockchain is complex. That’s why it takes more time to process any transactions. Also, the encryption of the system makes it even slower. Although they claim to be faster than traditional payment methods, still in some cases they can’t deliver it.
Completing a transaction can take up to several hours. So, if you want to pay for a cup of coffee, it will cause you trouble. It’s most suited for making large transactions where time isn’t a vital element. It’s an element of risk. And wasn’t it supposed to remove the ‘unsecured’ nature of blockchains from the equation?
Theoretically, the principle extends to blockchain networks which uses something other than store value. For example, logging transactions or interactions in the IoT environment.
These channels – in fact even computer files – can become slow and impractical. It’s not the case always. It only slows down when the network is staked with too many users. The more it grows, the slower it gets.
This blockchain adoption challenges can become a hurdle soon. So, we should hope for a solution fast. However, some new technologies offer a faster speed compared to the traditional ones.
The establishment has a direct interest in the failure of the blockchain. To be honest – It can disappear faster than we anticipate. So, it’s urgent to find a solution for theses blockchain adoption challenges.
Banks earn huge profits through intermediaries. And because of this, the costs are much less than usual. But if blockchain can outrun this factor, it will be much cheaper than this.
Banks use tremendous lobbying power with governments and legislators. It is conceivable that, if they decide that it is in their interest, the traditional financial sector can reduce the blockchain. They can also significantly reduce its usefulness and limit its availability.
The majority of the public is still not aware of the existence and potential use of this technology. If we want blockchain to be successful, it has to earn the acceptance. Even though the technology is making history, still it’s not enough to attract more consumers.
Also, the lack of proper marketing for this niche is making it unpopular. So, if you are not involved with this, you won’t even know it exists.
Currently, blockchain technology is almost the same meaning as Bitcoin. Most people only think bitcoin is the only blockchain network. Others don’t even know about it except the cryptocurrency.
Meanwhile, the value of Bitcoin continues to rise to unprecedented levels. And also, cryptocurrency remains associated with the dark transactions of money laundering, black trade, and other illegal activities.
Before the general adoption is possible, members of the public must understand the difference between bitcoins, other crypto-currencies, and blockchain. This will help to eliminate the sometimes negative implications of Bitcoin and make the technology disappear for itself. It will be the result in an increased willingness to use the technology.
Is There Anything More to blockchain adoption challenges?
Blockchain will face different blockchain adoption challenges before it is integrated into society. These include scalability, the time needed to verify transactions, the cost of transactions and security.
Particular attention has recently been focused on hacking incidents in Bitcoin-based companies and start-ups. What you don’t know here is that most of this situations are a result of rogue users.
For example, a software wallet, which is essentially the Bitcoin equivalent of a bank account. You have to install this wallet on your PC to access and store all your credits. However, the loophole here is that it doesn’t have any encryption.
So, anyone can access your PC and then take your credits.
Another scenario could be the 51% attack. Users can make changes to the network as they wish if more than 51% of users’ control the power. However, it’s an almost impossible outcome and won’t benefit the attackers tremendously. Moreover, regulations are not yet clear for settlement protocols with cryptocurrency protocols. Blockchain adoption challenges pose a threat here too.
On the positive side, regulators are taking more and more steps in some countries for dealing with this situation.
There are no restrictions on how financial institutions can use the blockchain to create and manage their internal networks. This will affect the external use of Blockchain technology, such as payments and transfers.
Central agencies of the United States and the United Kingdom indicate that they want to use a pragmatic approach. This news from the big banks is strengthening this practical approach.
Blockchain can still –
- Disrupt our current financing system
- Transform interbank payments
- Ensure peer-to-peer payments
- Provide opportunities to replace existing mechanisms for exchange.
- Preserve financial information, customer records, and agreements.
However, there are still many blockchain adoption challenges to see a real change in the way financial services use this technology. It seems inevitable that companies should follow it closely and be ready to adjust their services and get the results.
Although there is little doubt that blockchain technology will play a crucial role in both the public and private sectors, this future is even further away than many people think. The list of Blockchain adoption challenges mentioned above clearly underlines the need for technological improvements.
In the current state of blockchain technology, the main focus has to be making this new, innovative technology widely available.
Well, it still isn’t, because blockchain adoption will follow the same, slow trajectory of adoption all new tech goes through. Right now, several obstacles prevent this revolutionary technology from being as integrated into our lives as the internet.