The blockchain technology that was envisioned to disrupt the current business enterprises at a staggering rate has been witnessing some resistance from the business owners. It is because there are few bottlenecks that prevent blockchain from becoming the digital backbone of the organizations. By overcoming these challenges developers can re-kindle their hopes on this technology once again. Let shed some light on those challenges. Biggest barriers to blockchain adoption ( Image: fao.org) 1) Scalability Rising numbers of blockchain user, investors, tokens, and startups the blockchain is facing serious issues with scalability. Bitcoin blocks were originally hard-capped at 1MB or around 2,020 transactions, but in reality, the market demand is for infinite numbers. Besides, that bitcoin can handle only 3 or 4 transactions per second. For full-scale blockchain operations ( between consumer and business), it should be able to process hundreds or thousands of transactions per second. Even ethereum can only handle 15 transactions per second. One way to deal with this issue is to increase the block in the chain, but there is one more obstacle. It could become an expensive affair for blockchain users with more blocks and less transaction speed; the whole idea of decentralization would become meaningless. 2) Legal and compliance issue Blockchain resides on a computer or nodes located anywhere in the world. It does not fall under any jurisdiction boundary; if there is any fraud, there is no one you can blame. Take bank example, if your cheque bounces, the bank is liable to answer you. It can even take action against the defaulter. Here there is no governing law and jurisdiction to determine the rights and obligations of the user. 3) Network speed and transaction cost Network nodes store the UTXO database in RAM, and naturally, RAM is a limited resource. As the database grows, it becomes more expensive to maintain. Bitcoin can handle approximately 60 transactions per second, which is very less when compared to Visas 47000 transactions per second. In order to match Visa speed or any fiat currency, the transaction speed needs to be improved. To handle more users and more transactions, more nodes are required to process them. And maintaining and running those nodes are not cheaper. On top of that, transaction fees levied by miners could escalate with more users. 4) Immutable data A blockchain is immutable. It means that we cannot correct the mistake if there is any. It can only be fixed by adding another block to the chain with the agreement of all the participants. It can be a time-consuming and expensive process. One cannot wholly deny human error while updating blockchain data, and the risk of wrong interpretation of data stays with Blockchain. 5) Lack of professionals In the midst of the controversy about blockchain viability, a survey-report released by LinkedIn suggests that the blockchain is one of the top 10 most in-demand hard skills in 2020. But it is also true that blockchain positions remain unfilled as there is a shortage of qualified IT workers. 6) ICO (Initial Coin Offerings) investment Though ICO is envisaged as a future investment, there is a lot of risks associated with it. Currently, it is unregulated. Investing in an ICO is risky whether you choose an Ethereum ICO or a Bitcoin ICO. Also, if some fraud or scam takes place, there is no authenticated regulatory body to conduct the investigations. Also, the existing regulations don’t cover blockchain smart contracts. It could inhibit investment in blockchain, which eventually prevents the rolling of blockchain technology in the real world at his full capacity. 7) Illegal Trading If blockchain ensures secure transactions without relying on the third party, it also opens the gate for illegal trading. “Silk Route” is the best example of it. The website enables users to browse the site without being tracked and make illegal purchases in bitcoins. There are no defined rules in the system to prevent or monitor such unlawful trading. 8) Protecting IP ( Intellectual Property) One area that shows the clear application of Blockchain is towards IP property ( Copyright) Currently, you can find owner names, registration dates, and titles in the Copyright Office online records. But not about what is actually registered without going to the Copyright Office. This could be solved by blockchain. Some countries’ jurisdictional courts are positive about the blockchain significance in protecting IP. However, it will take a long time for its full-fledged adoption in law. Also, due to slow ticking transaction processes in Blockchain, IP experts will still be required for legal matters and examinations. One of the major concerns with blockchain is copyright information that was entered incorrectly. 9) Smart contract limitations In some scenarios defining smart-contract would be difficult. For example, to define rules to pay insurance to the farmers on the failure of crops owing to excess rain or drought. The smart contract would collect weather data and plant growth information, and based on that, they will pay out the insurance amount. The data in the smart contract are immutable, so the question is whether the data gathered would be accurate. Also, for highly populated countries, would it be feasible to pay a large number of farmers through blockchain. 10) Blockchain Interoperability One might not charge Apple phone with a Samsung charger or vice versa because their chargers are designed for specific devices. Similarly, each blockchain provider has a specific language and rule that could work only for that particular platform or blockchain. Like Bitcoin cannot work in Ethereum or Ethereum cannot work in Ripple and so on. For consumers, the blockchain could add meaning if these blockchain starts talking with each other. The businesses that are residing on the different platforms can share all their documents or info easily without worrying about the platform’s building blocks. 11) Blockchain audit Traditional audit methods use readily-available, historic data ledger, or audit trails. Blockchain environments are real-time and do not supply historic ledgers that allow for audit.
The blockchain technology that was envisioned to disrupt the current business enterprises at a staggering rate has been witnessing some resistance from the business owners. It is because there are few bottlenecks that prevent blockchain from becoming the digital backbone of the organizations. By overcoming these challenges developers can re-kindle their hopes on this technology once again. Let shed some light on those challenges. Biggest barriers to blockchain adoption ( Image: fao.org) 1) Scalability Rising numbers of blockchain user, investors, tokens, and startups the blockchain is facing serious issues with scalability. Bitcoin blocks were originally hard-capped at 1MB or around 2,020 transactions, but in reality, the market demand is for infinite numbers. Besides, that bitcoin can handle only 3 or 4 transactions per second. For full-scale blockchain operations ( between consumer and business), it should be able to process hundreds or thousands of transactions per second. Even ethereum can only handle 15 transactions per second. One way to deal with this issue is to increase the block in the chain, but there is one more obstacle. It could become an expensive affair for blockchain users with more blocks and less transaction speed; the whole idea of decentralization would become meaningless. 2) Legal and compliance issue Blockchain resides on a computer or nodes located anywhere in the world. It does not fall under any jurisdiction boundary; if there is any fraud, there is no one you can blame. Take bank example, if your cheque bounces, the bank is liable to answer you. It can even take action against the defaulter. Here there is no governing law and jurisdiction to determine the rights and obligations of the user. 3) Network speed and transaction cost Network nodes store the UTXO database in RAM, and naturally, RAM is a limited resource. As the database grows, it becomes more expensive to maintain. Bitcoin can handle approximately 60 transactions per second, which is very less when compared to Visas 47000 transactions per second. In order to match Visa speed or any fiat currency, the transaction speed needs to be improved. To handle more users and more transactions, more nodes are required to process them. And maintaining and running those nodes are not cheaper. On top of that, transaction fees levied by miners could escalate with more users. 4) Immutable data A blockchain is immutable. It means that we cannot correct the mistake if there is any. It can only be fixed by adding another block to the chain with the agreement of all the participants. It can be a time-consuming and expensive process. One cannot wholly deny human error while updating blockchain data, and the risk of wrong interpretation of data stays with Blockchain. 5) Lack of professionals In the midst of the controversy about blockchain viability, a survey-report released by LinkedIn suggests that the blockchain is one of the top 10 most in-demand hard skills in 2020. But it is also true that blockchain positions remain unfilled as there is a shortage of qualified IT workers. 6) ICO (Initial Coin Offerings) investment Though ICO is envisaged as a future investment, there is a lot of risks associated with it. Currently, it is unregulated. Investing in an ICO is risky whether you choose an Ethereum ICO or a Bitcoin ICO. Also, if some fraud or scam takes place, there is no authenticated regulatory body to conduct the investigations. Also, the existing regulations don’t cover blockchain smart contracts. It could inhibit investment in blockchain, which eventually prevents the rolling of blockchain technology in the real world at his full capacity. 7) Illegal Trading If blockchain ensures secure transactions without relying on the third party, it also opens the gate for illegal trading. “Silk Route” is the best example of it. The website enables users to browse the site without being tracked and make illegal purchases in bitcoins. There are no defined rules in the system to prevent or monitor such unlawful trading. 8) Protecting IP ( Intellectual Property) One area that shows the clear application of Blockchain is towards IP property ( Copyright) Currently, you can find owner names, registration dates, and titles in the Copyright Office online records. But not about what is actually registered without going to the Copyright Office. This could be solved by blockchain. Some countries’ jurisdictional courts are positive about the blockchain significance in protecting IP. However, it will take a long time for its full-fledged adoption in law. Also, due to slow ticking transaction processes in Blockchain, IP experts will still be required for legal matters and examinations. One of the major concerns with blockchain is copyright information that was entered incorrectly. 9) Smart contract limitations In some scenarios defining smart-contract would be difficult. For example, to define rules to pay insurance to the farmers on the failure of crops owing to excess rain or drought. The smart contract would collect weather data and plant growth information, and based on that, they will pay out the insurance amount. The data in the smart contract are immutable, so the question is whether the data gathered would be accurate. Also, for highly populated countries, would it be feasible to pay a large number of farmers through blockchain. 10) Blockchain Interoperability One might not charge Apple phone with a Samsung charger or vice versa because their chargers are designed for specific devices. Similarly, each blockchain provider has a specific language and rule that could work only for that particular platform or blockchain. Like Bitcoin cannot work in Ethereum or Ethereum cannot work in Ripple and so on. For consumers, the blockchain could add meaning if these blockchain starts talking with each other. The businesses that are residing on the different platforms can share all their documents or info easily without worrying about the platform’s building blocks. 11) Blockchain audit Traditional audit methods use readily-available, historic data ledger, or audit trails. Blockchain environments are real-time and do not supply historic ledgers that allow for audit.
The blockchain technology that was envisioned to disrupt the current business enterprises at a staggering rate has been witnessing some resistance from the business owners. It is because there are few bottlenecks that prevent blockchain from becoming the digital backbone of the organizations.
By overcoming these challenges developers can re-kindle their hopes on this technology once again. Let shed some light on those challenges.
Biggest barriers to blockchain adoption
( Image: fao.org)
1) Scalability
Rising numbers of blockchain user, investors, tokens, and startups the blockchain is facing serious issues with scalability. Bitcoin blocks were originally hard-capped at 1MB or around 2,020 transactions, but in reality, the market demand is for infinite numbers. Besides, that bitcoin can handle only 3 or 4 transactions per second. For full-scale blockchain operations ( between consumer and business), it should be able to process hundreds or thousands of transactions per second. Even ethereum can only handle 15 transactions per second. One way to deal with this issue is to increase the block in the chain, but there is one more obstacle. It could become an expensive affair for blockchain users with more blocks and less transaction speed; the whole idea of decentralization would become meaningless.
2) Legal and compliance issue
Blockchain resides on a computer or nodes located anywhere in the world. It does not fall under any jurisdiction boundary; if there is any fraud, there is no one you can blame. Take bank example, if your cheque bounces, the bank is liable to answer you. It can even take action against the defaulter. Here there is no governing law and jurisdiction to determine the rights and obligations of the user.
3) Network speed and transaction cost
Network nodes store the UTXO database in RAM, and naturally, RAM is a limited resource. As the database grows, it becomes more expensive to maintain. Bitcoin can handle approximately 60 transactions per second, which is very less when compared to Visas 47000 transactions per second. In order to match Visa speed or any fiat currency, the transaction speed needs to be improved. To handle more users and more transactions, more nodes are required to process them. And maintaining and running those nodes are not cheaper. On top of that, transaction fees levied by miners could escalate with more users.
4) Immutable data
A blockchain is immutable. It means that we cannot correct the mistake if there is any. It can only be fixed by adding another block to the chain with the agreement of all the participants. It can be a time-consuming and expensive process. One cannot wholly deny human error while updating blockchain data, and the risk of wrong interpretation of data stays with Blockchain.
5) Lack of professionals
In the midst of the controversy about blockchain viability, a survey-report released by LinkedIn suggests that the blockchain is one of the top 10 most in-demand hard skills in 2020. But it is also true that blockchain positions remain unfilled as there is a shortage of qualified IT workers.
6) ICO (Initial Coin Offerings) investment
Though ICO is envisaged as a future investment, there is a lot of risks associated with it. Currently, it is unregulated. Investing in an ICO is risky whether you choose an Ethereum ICO or a Bitcoin ICO. Also, if some fraud or scam takes place, there is no authenticated regulatory body to conduct the investigations. Also, the existing regulations don’t cover blockchain smart contracts. It could inhibit investment in blockchain, which eventually prevents the rolling of blockchain technology in the real world at his full capacity.
7) Illegal Trading
If blockchain ensures secure transactions without relying on the third party, it also opens the gate for illegal trading. “Silk Route” is the best example of it. The website enables users to browse the site without being tracked and make illegal purchases in bitcoins. There are no defined rules in the system to prevent or monitor such unlawful trading.
8) Protecting IP ( Intellectual Property)
One area that shows the clear application of Blockchain is towards IP property ( Copyright) Currently, you can find owner names, registration dates, and titles in the Copyright Office online records. But not about what is actually registered without going to the Copyright Office. This could be solved by blockchain. Some countries’ jurisdictional courts are positive about the blockchain significance in protecting IP. However, it will take a long time for its full-fledged adoption in law. Also, due to slow ticking transaction processes in Blockchain, IP experts will still be required for legal matters and examinations. One of the major concerns with blockchain is copyright information that was entered incorrectly.
9) Smart contract limitations
In some scenarios defining smart-contract would be difficult. For example, to define rules to pay insurance to the farmers on the failure of crops owing to excess rain or drought. The smart contract would collect weather data and plant growth information, and based on that, they will pay out the insurance amount. The data in the smart contract are immutable, so the question is whether the data gathered would be accurate. Also, for highly populated countries, would it be feasible to pay a large number of farmers through blockchain.
10) Blockchain Interoperability
One might not charge Apple phone with a Samsung charger or vice versa because their chargers are designed for specific devices. Similarly, each blockchain provider has a specific language and rule that could work only for that particular platform or blockchain. Like Bitcoin cannot work in Ethereum or Ethereum cannot work in Ripple and so on. For consumers, the blockchain could add meaning if these blockchain starts talking with each other. The businesses that are residing on the different platforms can share all their documents or info easily without worrying about the platform’s building blocks.
11) Blockchain audit
Traditional audit methods use readily-available, historic data ledger, or audit trails. Blockchain environments are real-time and do not supply historic ledgers that allow for audit.
