Blockchain Tech Disruption: Evolving To Meet New Challenges
>> This article is for informational purposes only and is not financial advice. The information does not constitute investment advice or an offer to invest.
Blockchain and DLT as a technology is moving to the forefront of public interest following an extended bear market that has brought crypto to its’ knees. With investors pivoting their interest to the underlying technology, new expectations and timelines have been created to push for mass-adoption.
But is blockchain actually ready for the masses? Despite renewed investor interest, blockchain tech still has to evolve to overcome notable challenges before adoption reaches people who are not early adapters or are not very tech savvy. These are the issues still in need of solutions for blockchain tech to meet new expectations in 2019:
1. Scaling and Interoperability
The growth of blockchain is dependent on the technology’s ability to scale and interact with other systems and networks. Currently, blockchain as a service is limited in performance due to slowed transaction processing times and the inability to have various blockchain platforms interact with each other. For one of the largest demographics of blockchain users, the enterprise sector, the inability to interoperate has significantly slowed adoption.
This challenge is being met by developers creating consensus mechanisms. Consensus mechanisms refer to how participants in a blockchain network agree that the transactions recorded in the digital ledger are valid.This mechanism creates a trust and validity in transactions between participants not familiar with each other. Interoperability is being conquered by open-source standardization and collaboration between blockchain networks.
2. Cost and Usability
Another big challenge for blockchain tech to overcome: the cost of implementation and ease of use. A recent survey by Gartner found that only 8% of CIOs are in short-term planning and execution phases when it came to introducing blockchain tech to their enterprise.
The cost of creating and implementing blockchain networks remain a significant barrier. A possible solution could be the introduction of cloud-based blockchain technology from tech giants like IBM, Microsoft , AWS and others, as these companies have made cost reduction and scaling the crux of their business offerings.
For blockchain to evolve, the average user experience also needs significant improvement. Years of exposure to technology and software have proven that consumers are uninterested in storing keys, and have little patience with overcoming clunky UX. The good news: developers and blockchain companies are catching on, and working to create a more welcoming look and feel for consumers and significant .
At present, regulation in the blockchain sector is still a grey area. While some states like Wyoming (and countries like Malta, Estonia and Switzerland) are working to change this, their progress has highlighted that many existing regulatory frameworks do not address the developments made in the blockchain field. This regulatory limbo is affecting adoption, with many waiting for some finality in legislature prior to implementing their own blockchain solution.
In 2019, with Wyoming and multiple other states introducing and passing new blockchain bills, hopes are high that these frameworks will spread across the US and allow others to follow suit. Many other regulators have also established working groups and teams to tackle the issue of blockchain regulation, and these groups are making some progress.
Blockchain has traditionally been known as distributed public ledger. This public aspect is necessary for the technology to provide trust and to verify transactions, but it also impedes the private ownership of data. Many industries are entrusted with sensitive consumer data which cannot be placed on a public ledger.
Consider the healthcare industry as an example — it is dependent on record-keeping and secure data storage for daily processes. For this sector to benefit from blockchain, access must be given to a variety of healthcare providers, from pharmacies to nurses to hospitals across the country. The larger this network of access becomes, the more exposed and at risk the patients’ personal data becomes and the harder it becomes to place trust in the system.
Of course, wherever there is a business problem, there is usually a technology solution in the works. So, there are some forthcoming solutions to the privacy versus trust issue making use of new developments like stealth addresses, ring confidential transactions and state channels.
Blockchain technology shows increasingly exciting promise, contributing greatly to ongoing public interest. Some of the challenges to overcome include scaling and interoperability, implementation cost, regulation and privacy vs trust. Enterprise use cases for blockchain are proliferating, and solutions for some of the current problems are building momentum as the tech is evolving. Unlike for cryptocurrencies alone, this evolution bodes particularly well for the foreseeable future of blockchain and DLT.
Disclaimer: Virtual currency is not legal tender, is not backed by the government, and accounts and value balances are not subject to consumer protections. This article is for informational purposes only, and is not financial advice. The information does not constitute investment advice or an offer to invest.