The 6 Limitations of Blockchain Technology.
There are 6 limitations in my opinion. Please comment and add any that I may have missed!
Blockchain technology involves an entirely new vocabulary.
It has made cryptography more mainstream, but the highly specialized industry is no place for a beginner… Thankfully there are blockchain and cryptocurrency courses and indexes being created for newcomers, but overall this is a very complicated industry that will not be soaked in and applied overnight.
Blockchains require a large network of users. If a blockchain does not hold a robust network with a widely distributed grid of nodes, it becomes more difficult to reap the full benefit.
There is some discussion and debate about whether this a fatal flaw or not for many blockchain projects.
Transaction Costs, Network Speed
Bitcoin currently being a prime example. The first few years of it’s existence, it was noted that transactions we’re “nearly free”
Now, as the network continues to grow, we can clearly see that at this rate using Bitcoin will NOT be the most cost effective option of transferring money due to rising transaction costs in the network.
There’s also the “politically charged” aspect of using the bitcoin blockchain, not for transactions, but as a store of information. This is the question of ‘‘bloating” and is often frowned upon because it forces miners to perpetually reprocess and rerecord the information.
If a blockchain is used as a database, the information going into the database needs to be of high quality. The data stored on a blockchain is not inherently trustworthy, so events need to be recorded accurately in the first place.
The phrase ‘garbage in, garbage out’ holds true in a blockchain system of record, just as with a centralized database.
Unavoidable Security Flaw
There is one notable security flaw in Bitcoin and other blockchains: If more than half of the computers working as nodes to service the network tell a lie, the lie will become the truth. This is called a ‘51% attack’ and was highlighted by Satoshi Nakamoto when he launched bitcoin.
For this reason, bitcoin mining pools are monitored closely by the community, ensuring no one unknowingly gains such network influence.
Blockchain protocols disrupt many of the systems in which our banks and governments have created over the period a very long time… In result to blockchain’s increasing adoption, many politicians have felt obligated to take a stand to fuel or smother the new technology within their jurisdictions.
Many, in my opinion, are very reactionary in their behavior… but only time will tell as to how beneficial or detrimental the technology can be within different societies. Just know that their opinions do matter and play a major role in the progress of applications running on a blockchain.