What challenges does Blockchain need to overcome to become massive?
The word blockchain has been in fashion in the finance and supply chain sectors in recent months because of the extensive benefits that it brings. However, it is still a technology with many obstacles to overcome to see it getting really massive.
According to Deloitte, there are five main obstacles that technology needs to overcome in order to see widespread adoption.
5 Industry Transforming Blockchain Applications | Data Driven Investor
Unless you have been living under a rock, I am sure you have heard about blockchain by this time. While blockchain…
The consultant’s researchers in a report published on Monday said: “In contrast to some legacy transaction processing systems capable of processing tens of thousands of transactions per second, the Bitcoin blockchain can handle only three to seven transactions per second; the corresponding figure for the Ethereum blockchain is as low as 15 transactions per second. ”
He adds: “Due to its relatively poor performance, many observers do not consider blockchain technology viable for large-scale applications.”
It’s true, this is a very important limitation that Bitcoin blockchain still has. That’s why lightning network was created as a serious alternative in order to make transactions faster (especially micro-payments).
In the case of the blockchain of bitcoin and ethereum, they have this limitation; however, cryptocurrencies like Stellar and Ripple have paid special attention to it so that they are quickly scalable. That’s why this last cryptocurrencies are being so well positioned in the crypto market since they are perfect for making payments.
More and more cryptocurrencies (and thus blockchain) are created every year these networks cannot necessarily communicate with each other (which creates a problem of standardization of blockchains.
This standardization is what the industry calls interoperability.
The report said that, on the GitHub coding site, there were more than 6,500 active blockchain projects that used a range of platforms with different coding languages, protocols, consensus mechanisms, and privacy measures.
This “interoperability” is absolutely essential for effective collaborations in applications to share solutions.
It cannot be possible that there are 6500 projects that behave like islands.
Leading companies in blockchain development should encourage this type of integration which will only bring benefits to the industry.
One of the most frequent criticisms of the bitcoin’s blockchain is the fact that it depends on a lot of quantity of electricity to function.
Miners use huge computer equipment with multiple servers to keep the network running, and that process is certainly not cheap.
A study published by Elite Fixtures earlier this year said it cost more than $ 26,000 to extract just one bitcoin in South Korea, which is one of the world’s largest markets for cryptocurrency trading.
Attacking this issue, there are countries (Kuwait, Venezuela, Myanmar, Bahrein y China) that have facilitated the work of bitcoin miners making this cost more manageable. See more about it here.
Validating transaction costs
Although bitcoin miners are paid a sum of bitcoin for their labors, the price of validating transactions in the first place could be a problem for the widespread penetration of that technology into commercial activity.
Companies like Amazon, IBM, and Microsoft, are working on ways to improve the cost involved in building blockchain networks through the use of cloud technology. His work in the field focuses on the creation of what is known as blockchain-as-service, where effective “templates” are offered to make it easier for developers to install and execute blockchain networks.
The report also notes that Hyperledger’s Sawtooth open source platform allows developers to create blockchain applications in their preferred coding language, without requiring knowledge of the core system.
As cryptocurrency prices increased last year, regulators became increasingly concerned about the speculative nature of the market. These are three examples: (Find more examples here)
The laws governing exchanges vary by state, and federal authorities actually differ in their definition of the term ‘cryptocurrency’. The Financial Crime Execution Network (FinCEN) does not consider cryptocurrencies to be legal tender, but since 2013 it has considered exchanges as money transmitters (subject to its jurisdiction) on the basis that tokens are “another value that substitutes to the currency. “ The IRS, on the other hand, considers cryptocurrencies as property, and has issued a tax guide accordingly.
Cryptocurrencies are not legal tender in Canada, but the Canadian Tax Agency has taxed them since 2013. Canada has been quite proactive in its treatment of cryptocurrencies: in 2014 it brought entities that traded virtual currencies under the Product of Crime (Washing of Money) and the Terrorism Financing Law, while in 2017 the British Columbia Securities Commission registered the first cryptocurrency investment fund only.
Cryptocurrency exchanges and trade are legal, and the city-state has taken a more friendly position on the issue than regional neighbors. Although cryptocurrencies are not considered a legal tender, the Singapore tax authority treats Bitcoins as ‘goods’ and, therefore, applies the goods and services tax (Singapore’s version of the value-added tax).