Here’s why ‘Blockchain’ is not yet ready to gain traction.

So much buzz going on, so much hype surrounding blockchain and its applications, so many people working on this, so much money already put into it, and counting. Then why the hell is it still not ready?

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I am fairly certain that you’ve been hearing about this technology from quite a long time now and not sure if it is really upto something.

Is it true that Blockchain will change the way we use Internet today? Just like the Internet changed the way we lived, more than 30 years ago? Or is it just another futile technology waiting to get its ticket punched to heaven?

So, before jumping right in, let me clear up some basics regarding blockchain and its political aspect:

• Blockchain is a perpetual series of “decentralised distributed immutable records of data”. (Those of you who might feel a little edgy, considering all that heavy terminology, just sit back and go on reading while I break it down to you) See, decentralised means there is no centralised authority to govern the system and distributed means that everyone has their own copy of this record of data. Immutable means, once written on Blockchain, that data cannot be modified. So, in simple terms, it is a database, consisting of small individual records or pieces of data (known as ‘Blocks’ of data) cryptographically “chained” together via ‘hashes’. Hash is a fixed length code generated by manipulating the data itself. Each block has its own hash and the hash of its predecessor which forms a chain to the beginning. Learn more about hashes here — What Is Hashing? [Step-by-Step Guide-Under Hood Of Blockchain]
• Blockchain is not a “new technology”, rather it is a combination of 3 pre-existing technologies:

1. Distributed computing (because it is managed by a cluster of computers in a network and not a single entity, thus they all work together as per the protocol with no one in control)
2. Cryptography (the blocks of information are individually secured and linked with each other by the concepts of cryptography)
3. Game-Theory (when there is equal distribution of power, there must be some set of rules to ensure fairness of the system, considering that a participant might take action based on the advantage they get and not by moral values or as dictated by the rules. To understand more about how game-theory works in blockchain based systems, read this — Game Theory and Blockchain)

• Blockchain is a technology that intends to remove ‘Trusted third parties’, which have a full control over the system and do not participate in the system, rather enforce the rules and develop trust, centralised trust.
• Blockchain is technology that enables power redistribution by giving equal control and rights to everyone in the system and eliminating third parties, thus the most powerful trusted organisations like banks, search engines, e-commerce websites and several other business corporations have the most to fear from blockchain. Thus, many organisations have started working on blockchains solutions before it could overpower them.

Sure as hell blockchain is capable of solving far more problems than we can imagine, but why it isn't yet ready to take over?

The biggest reason — We’re “okay” with centralisation.

Since these third parties in every system have developed a huge layer of trust around them, so replacing them or developing a more effective blockchain solution will not be easy.

1. We’re fine with banks charging us a good amount of “Fee” to send money across borders. We’ve accepted that. That’s what banks are there for, right?
2. We’re fine to first browse to ‘Google’ in order to get any information from the web.
3. We gladly visit Amazon and other E-commerce websites when we want something delivered at our doorstep.
4. We jump right into Uber app and search for nearby taxi whenever we want to catch a ride.

In addition to these examples above, there are thousand others which blockchain could solve, if implemented properly but we’re just fine. Its very difficult to drag people to adapt to something new unless we give them something more than they already have.

Another reason — Governments hate cryptocurrencies

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Blockchain work in a such a way which requires a lot of computational power to secure the data digitally and hence uses a lot of electrical power which must be incentivised (rewarded) in some way. That incentivisation happens in form of cryptocurrencies like — Bitcoin, Ether, XRP etc.

So, as per the protocol no one governs and regulates the cryptocurrencies and thus it might be used to shield some illegal trades (like payments in the dark web often happen in Bitcoins, because it is not governed by anyone and hence cannot be tracked) and also our government likes to keep the rulebook in their hands, so they won’t like a system where they are not in control.

Last but not the least — “Yeah, I’m fine with banks and all. At least they’re fast.”

Blockchains are a list of immutable records and Mr. Satoshi Nakamoto (the anonymous creator of Bitcoin) provided a hard mathematical proof that it is almost impossible for an attacker to tamper with the data on Blockchain. He calculated that, as more and more blocks get added to the blockchain, the probability of attacker trying to succeed, falls exponentially starting from an already tiny value. As you can see here is the snippet of Bitcoin white paper (page — 8):

Read the full bitcoin paper here — Bitcoin Whitepaper.

BUT, lets face it, blockchains are incredibly slow, at least at present. The security of blockchains relies on the idea that trust can be intrinsically tied to a large amount of computational work and in order to do so, computers must solve a difficult cryptographic puzzle to be able to write anything on a blockchain. This process takes time and hence the services like transactions, search engine information retrieval etc. which need to be serviced in milliseconds would take upto minutes and that is just unacceptable.

To provide you a clearer picture, let me give you a real life comparison:

VISA processes an average of 1700 transactions per second worldwide with a maximum capacity of handling upto 24000 transactions per second. Whereas, in a Bitcoin blockchain, there can be no more than 2400 transactions in a single block and the algorithm of Bitcoin keeps on adjusting the difficulty of that cryptographic puzzle, such that — it must take an average of 10 minutes for one block to be mined on the blockchain. So, do the math and you'll realise that the Bitcoin blockchain can process upto 4 transactions per second. That’s just incomparable!

Although, gradually we are starting to see some major improvements like, Ethereum can mine a block in 15 seconds compared to Bitcoin in 10 minutes which makes a huge difference.

HOWEVER, blockchain is a revolutionary technology and is in its infancy. The blockchain market is yet very volatile and that's why the cryptocurrency rates change drastically, because very few people are part of it yet. Thus, the technology has much more to run before it can fly. Several tech giants are working on developing and implementing blockchain solutions in real world applications and we might see some fundamental changes soon, in the way things currently work.

And lastly, no matter how many hurdles there might be, technology advancement, much like nature, has its way to carve its path around all barriers.

Thanks for reading. Stay healthy & keep learning :)