10 Ways We Can Improve Blockchain
This tech is awesome, but here is what needs to fixed while it still can…
Blockchain is the underlying technology behind cryptocurrency. Simply put, Blockchain is a decentralized, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.
While this was invented for Bitcoin, the Blockchain technology has unreleased a torrent of new applications in industries like healthcare, music, auto, and AI.
The technology is extremely promising. It has the potential to improve millions of lives. But because it is new, it s important to be mindful of the areas of concern that Blockchain leaders should address before things become too difficult to remedy.
I had the opportunity to speak with 10 Blockchain leaders, who shared with me ten of their top concerns that need to be addressed.
1. Single Currency
Potential for a Single Currency. I personally don’t think this will ever happen, but the idea of just one currency, even a decentralized one, terrifies me. Every network has some form of consensus used for validating transactions, but there is always a potential even with a very simple system like Bitcoin that control of the technology could be vested in the hands of those using it for their own benefit against the masses. As long as we have multiple choices there will be less risk of this. — Crystal Stranger, co-founder of PeaCounts.
Elitism in the industry. Blockchain needs to be accessible to the wider public. We can’t be guarded off from the rest of the economy and tech industry. In order for cryptocurrency and blockchain to take over the incumbent systems, we need it to remain decentralized and adopted across the world. — Alicia Ferratusco, Co-Founder of Starfish
Privacy is a huge concern for blockchain because it’s transparent. You don’t want your competition to know who you are doing business with or who you are paying. Unfortunately Bitcoin is not private money. Many have turned to coins like Monero, a digital coin that offers a higher degree of anonymity and untraceability baked into its design. I don’t own any Monero, but I can certainly see the appeal. — Sarah Austin
4. Energy Consumption
Scalability & Energy Consumption. Bitcoin can handle approximately 60 transactions per second, which pales in comparison to Visa’s peak rate of 47,000 per second. In order for it to expand into the same ubiquitous role as fiat currency, cryptocurrency must be able to process much higher numbers of transactions.
If you look in to payment space, the global Visa/Mastercard networks can handle about 40,000 ~ 50,000 transactions per second. The ripple network can process 1,500 transactions per second. Blockchain can process about 1,000 transactions every eight minutes, or seven transactions per second. That’s it. You need to get massive scalability before this technology can be used in payment solutions, and there has to be a solution that solves for scale and high volume.
Bitcoin — last year it was claimed that the computing power required to keep the network running consumes as much energy as was used by 159 of the world’s nations.
Even at the current volumes of about 1,000 transactions every eight minutes, it consumes more energy than it takes to run the entire Visa network. I read in The New York Times that if the blockchain could be scaled to reach the transaction number of Visa, the energy requirement will be equivalent of 5,000 nuclear reactors, or the entire energy consumption in the world, and we are only talking about one payment network i.e. Visa, not even Mastercard or WeChat Pay. — Yi Zhou, founder YiZhouStudio, board advisor at ArtWallet
5. Distorted expectations
I worry that the hype around blockchain and crypto will create distorted expectations. They are indeed groundbreaking and have lots of useful applications, but will only reach their full potential if applied judiciously. — Rosemary O’Neill, Co-Founder of Narrative Company.
6. Mining Issues
Mining Issues — For the blockchains and coins that require mining, the issues I take are two-fold. The first is that mining unnecessarily adds a great deal to the pollution of our planet. According to digiconomist.net, to mine 1 bitcoin, it requires the same amount of energy that can power 26.41 U.S. households. The energy consumption for mining coins is off the charts with a carbon footprint per transaction of 382.9kg of CO2.
The second issue is that millions of anonymous and unverified miners pose a potential security threat to the integrity of the entire system. The concept of decentralized mining is trust-less such that power and trust is distributed, but with the ability to generate mining profits in the millions, this technology has become a massive target for theft. It will be difficult for such a system to prevail when its core purpose is jeopardized and the community is left to entrust cybercriminals to process their crypto assets.
February 2018, a Monero miner hack made the headlines, “Hacker Group Makes $3 Million by Installing Monero Miners on Jenkins Servers” The mining process was legitimate, but the profits were illegal. The miners were actually cybercriminals that hacked 500,000 computers around the world and used them to execute the work. They infected computers with malware, installed the Monero mining software on them, and with enough machines and computing power, they netted millions of dollars in illegal mining profits. Overusing the hardware of the compromised machines also left some computers physically damaged beyond repair, and it raises another question, what else did the hackers steal or do to those computers? — Kara Coppa, the cofounder and COO of BLAKFX
7. Disruption in Traditional Markets
The reality is that this global connected market effects every other piece of the world’s financial community. As crypto currency matures, it will become a force in driving international markets. Figuring out who governs the globe in this financial shift will be interesting. — Kelly Stickel founder and CEO of Remodista
Regulation for crypto and blockchain is all over the place. Everyone wants a piece of the regulation and companies want to comply, but there is no solid framework for current companies and organizations to operate from. There is amazing possibility, and regulators shouldn’t hinder it. — Maria Eagleton, co-founder of ChargaCard
Hacking — We need to take security very seriously. People new to crypto are not used to having to be so careful about personal security, and that makes it easier for hackers to steal crypto from mainstream users. — Nydia Zhang, Co-founder and Chairman of Social Alpha Foundation
10. Lack of maturity
Lack of maturity. Obviously, a lot of the folks involved in this industry right now are really young. I think this can sometimes lead to decisions that aren’t so well thought-out, to be honest. — Diane Blattner Kresal, Chief of Staff at Dispatch.