The Disadvantages
of Blockchain :
While blockchain has a significant
upside, there are significant challenges in adopting it. The roadblock to using
blockchain technology today is not just technology. The real challenges are
political and regulatory, and for the most part, the thousands of hours required
to integrate blockchain with custom software design and current business
networks say nothing. Here are some of the challenges that stand in the way of
widespread blockchain adoption.
Technology cost
While blockchain can save users money
on transaction fees, the technology is far from free. Bitcoin's "proof of
work" system that uses transactions to verify transactions, for example,
uses a lot of computational power. In the real world, the power coming from the
millions of computers in the Bitcoin network is close to what Denmark consumes
annually. All that energy costs money, and according to a recent study by
research firm Elite Fixtures, the cost of mining a bitcoin varies dramatically
depending on location, from just $ 531 to $ 26,170.
In terms of average utility costs in
the United States, that number is closer to 4,758. Despite the mining bitcoin
costs, users continue to pay their electricity bills in order to check
transactions on the blockchain. This is because when miners add a block to the
bitcoin blockchain, they are given enough bitcoin to take advantage of their
time and energy. When it comes to blockchains that do not use cryptocurrency,
miners must pay or be encouraged to check transactions.
Speed inefficiency
Bitcoin is the perfect case study for
the potential inefficiency of blockchain. Bitcoin's "proof of work" the system takes ten minutes to add a new module to the blockchain. At that rate,
it is estimated that the blockchain network can only manage seven transactions
per second (DPS). Although other cryptocurrencies such as Ethereum (20 TPS) and
Bitcoin Cash (60 TPS) perform better than Bitcoin, they are still limited by
blockchain. The legacy brand visa, for the environment, is 24,000 DPS.
Illegal activity
Confidentiality on the Blockchain
Network protects users from the hack and protects privacy, allowing illegal trading
and operation on the Blockchain Network. The best example of blockchain being
used for illegal transactions is Silk Road, an online "dark web" a marketplace that operated from February 2011 to October 2013, which the FBI
closed.
The website allowed users to browse
the website and make illegal purchases on bitcoins without being tracked. The
current U.S. regulation prevents users of online transactions from being
anonymous, as built in the blockchain. In the United States, online
transactions require that their customers open an account and check the
identity of each customer to ensure that customers do not appear on any list of
known or suspected terrorist organizations.
Central bank concerns
Several central banks, including the
Federal Reserve, Bank of Canada and the Bank of England, have begun
investigating digital currencies. According to a February 2015 Bank of England the research report, "Further research is needed to develop a system that can
use distributed ledger technology without compromising a central bank's
currency and protecting the system against systematic attacks."
Hack sensitive
New cryptocurrencies and blockchain
networks make up 51% of attacks. These attacks are difficult to execute due to
the computational power required to gain control of the majority of the
blockchain network, but according to NYU computer science researcher Joseph
Bono, that may change. Bonney issued a statement last year that 51% of attacks
are likely to increase because hackers can now rent computing power rather than
buy all the equipment.
What’s next for
Blockchain?
First proposed as a research project
in 1991, Blockchain is conveniently settling in its late twenties. Like most
millennials, Blockchain has seen its fair share of public testing over the past
two decades and businesses around the world are speculating on what the
technology is capable of and where it will go in the coming years.
Blockchain is finally making a name
for itself at the age of twenty-seven because of the many practical
applications of the technology already being implemented and explored. As a buzzword in the tongue of every investor in the nation, blockchain stands to
make business and government operations more accurate, efficient, and secure.
As we prepare to move into the third a decade of blockchain, this is no longer the “if” question that legacy
enterprises are embracing technology - it is the “when” question. learn more...
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