There is no doubt that blockchain technology has enormous potential. It is perhaps one of the biggest buzzwords in technological world today. And one thing is for sure that the technology is here to stay.
Blockchain claim to fame after Bitcoin came into existence back in 2019. So, you see, the underlying technology on which Bitcoin works is blockchain. And ever since, the technology has undergone a huge change. Developers are always looking for ways to find use cases so that this technology can become more mainstream.
So, we hear all positive things about blockchain and it’s true that it can positively influence our world. But you cannot ignore the fact that there are some challenges that this technology need to overcome. Despite the challenges it has to overcome, there are still a lot of people who are supporting it.
And there are also people who think that it is just a bubble and the technology will fade away with time.In this post we talk about talk about the challenges that Blockchain has to overcome.
Top Challenges Faced By Blockchain
One of the most critical features of the Blockchain technology is the pseudonymity. So, what does it mean? It means that everyone knows that the transactions are happening in the real world but there is no real-world identity attached to it. No one actually knows about the person who initiated the transaction. So, chances of fraud are very high. And if fraud happens, there is no way to track the person. Tracking the person is really out of question. It is the major concern when it comes to tackling the frauds.
When users enter the details of smart contracts in case of public blockchain like the Ethereum network, those details are open to the public. And in such cases, all your information like health records, medical documents, identity, personal information and even your financial reports are in risk. They are prone to hacker attacks.
Lack of Regulations
One of the biggest problems with the blockchain technology is that there is lack of regulations.
In case of the public Blockchain, the details of smart contracts entered by the users in the Ethereum network become open to the public.
Under such circumstances, uploading data like health records, personal information, medical documents and identity verification, financial reports become vulnerable to hackers attack.
Lack of Regulations And Governance
There are peer-to-peer transactions that take place and there is nobody governing these transactions. Moreover, there is a lack of governance from authorized bodies. No one is responsible for maintaining the system and no one actually maintains it.
This makes the whole system lot more dicey and skeptical. This is the challenge that blockchain still has to overcome.
Set up Cost
The cost for setting up Blockchain technology is very high. The developers might be singing the praises of this technology. But we cannot ignore the fact that the cost of setting up is still on a higher side. If you’re willing to set up the whole operation at your house, that will cost a lot. Besides, you will have to buy specialized hardware as well.
The technology is still brand new and the organizations who are attempting to implement this blockchain technology have to spend a lot of money in setting up the infrastructure, and training. There are many other factors that affect the overall cost. All in all, it is a very costly technology and you will end up sending a lot of money. This is another area where this technology can do better.
Huge consumption of energy
Another area where blockchain still has to improve is the energy it consumes. You see, to validate even a single transaction to make sure if they follow the Proof of Work mechanism, a large number of energy is consumed while solving the complex mathematical problems. According to the white paper published in June 2017, the energy consumed by bitcoin networks can power 700 average American houses.
Now the consumption of electricity is so huge, it becomes necessary to come up with the solution or maybe an alternative. Blockchain need to overcome this challenge if it has to stay.
Perhaps the biggest challenge blockchain faces is the perception it holds in the people’s eyes. Not many people think that this technology is here to stay and they don’t see it as something which will ever go mainstream. Besides, it doesn’t have easy access and lack of regulation is also there. All these factors are creating a lot of problems for the technology.
For blockchain to rise in popularity and become mainstream, it has to overcome these challenges and we believe that the technology has a long way to go.