Any new technology will always go through a speculation stage and challenges. 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.
I will go over these challenges one by one in a nutshell.
CRIMINAL CONNECTION
Cryptocurrency transactions are anonymous, this makes them target for criminals to send fraudulent transactions. The nature of the network is decentralized so that no one can know your true identity except your public address.
REGULATION
At present, in crypto, no one follows any specific rules when it comes to the blockchain. Regulation is cardinal in any industry to protect everyone from bad players. But if the governments creates rules for the blockchain, then the whole point of decentralisation is in vain.
SECURITY
Every blockchain boasts about their security. But like any other technology blockchain also comes with a few security problems.
The 51% attack on the network is one of the security problems of the network. In this attack, hackers can take over the network and exploit it in their way by gaining more than 50% of the total network hash. They can even alter the transaction process and restrict other people from creating a block.
SCALABILITY
Let me borrow dictionary definition here,
Scalability is the ability of a computing process to be used or produced in a range of capabilities.
So, the main issue is how many transactions these cryptocurrency can perform if adopted at large scale. The blockchain is not only for crypto transactions but also can be applied to many other industries. Already there are transaction delays during peak times, what more when it is adopted at large scale?
ENERGY CONSUMPTION
Most of the cryptocurrencies 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 high computational power for mining (We discussed Mining in earlier post).
Mining will require you to solve complex mathematical equations using your computer or ASICs. So, when you start mining, your PC or ASIC will take more and more electricity to overcome this situation.
If power consumption keeps increasing then, miners will take more power than the world can provide by 2020.
PUBLIC PERCEPTION
The majority of the people are still not aware of the existence and potential use of the blockchain technology.
Currently, blockchain technology is almost the same meaning as Bitcoin to many people. Most of them only think bitcoin is the only blockchain network. Others don’t even know about it except the cryptocurrency word.
There are still many blockchain challenges to see a real change in the way financial services use this technology, please have further reading to understand more than what I share this.
Thank you for reading....
Francis Mudenda
Tutor
Investor
Author
Web Dev