This week in Flash Learn we are facing harsh realities, and examine the significant drawbacks of blockchain technology.
Below you will find the six major problems with Blockchain right now.
- 1. Scalability
Scalability is truly a trilemma- it is the question of how many transactions can blockchain process without sacrificing either speed, security or decentralization.
Vitalik Buterin, the creator of Ethereum, has described it as follows:
As cryptocurrencies spread in the last few years, more and more transactions were recorded on certain blockchains, like Bitcoin or Ethereum, increasing the size of the chain and making computation more resource-intensive. This decreases the mining capability, and keeps the transaction speed low- Ethereum can process about 15-20 TPS, which compared to the 45,000 TPS on the Visa network is not enough for the current world.
Solution: many are trying to solve this issue by either using entirely new blockchain platforms or employing a second layer on existing blockchain applications to increase scalability.
- 2. Security
As mentioned above, scalability directly affects security issues on a blockchain. There are three major problems we need to consider within security. Firstly, if the majority of validators are corrupt, fraudulent transactions can be added to the blockchain- this is called 51% attack. Secondly, smart contracts can be vulnerable- a wrongly written smart contract can be exploited. Thirdly, private keys, which constitute the only access to cryptocurrency funds, are hard to keep safe, and can not be recovered if lost- resulting in inaccessible assets on the blockchain.
Solution: innovative blockchain platforms and diverse consensus methods are being developed to increase security against malicious nodes taking power. While autonomous, self-executing smart contracts are a high possibility, we need to learn how to use them, write them, and find intersections with legal systems.
- 3. Reputation
Blockchain suffers from an image problem: in the general public many still fully associate blockchain technology with cryptocurrencies, with high volatility and shady transactions. Blockchain for many is even passing fancy, unreliable technology and just a useless trend. Some others believe blockchain can be applied to anything and will change everything in the world.
Solution: there are significant efforts to educate audiences, highlighting the separation of blockchain from cryptocurrencies. With the development of practical use cases and increased communication, a brighter image is forming towards what blockchain can accomplish.
- 4. Regulation
Blockchain brings a new possibility in many fields- investment, data sharing, and privacy, financial transactions, etc.. The regulatory environment is trying to adapt, but still, many questions remain: how will data on blockchains comply with privacy laws? What will be the regulation on tokenized securities?
Solution: Governments around the globe are pushing for better regulations around technology, working with industry professionals to establish a framework suited for blockchains. Countries such as Malta, Israel, and South Korea, to mention a few, have developed an exemplary open approach.
- 5. Complexity
Blockchain technology is a hard concept to grab- nodes, immutability, smart contracts, cryptography, etc.. None of these are easy to understand. Moreover, the user experience of blockchain applications has not been perfected yet- many applications are complicated to use and understand.
Solution: Education is crucial for blockchain technology in a friendly, understandable way. This is our main mission with Flash Learn. Secondly, blockchain applications are striving to reduce complexity, and consider users who do not know in depth technology to use it. At the intersection of these 2 points, we will achieve mass adoption.
- 6. Interoperability
One of the current issues in the market is the appearance of fierce competition between blockchain platforms. Ethereum, Waves, Hyperledger Fabric, Stellar and R3 Corda, and many more on the market seem to be competing to build better applications. The truth is, these applications have different benefits and will be used in different environments.
Solution: building cooperation and interoperability. Everyone is striving for the same goal- spreading blockchain technology to make our world more effective. The blockchain platforms are starting to communicate with each other, and creating overarching interoperable solutions.
These are the six major hurdles now in blockchain technology. It might seem that blockchain is flawed mainly- but we need to remember that these are the baby steps of the technology. Blockchain now is what the Internet was in 1995- complex, inefficient with world-changing potential.
Now is your chance to let us know which problem you like to hear more about it?