The hype blockchain may have exceeded its ability to meet expectations to transform many industries and reach technological benchmarks. In this article there are 4 problems concerning blockchain that any potential user should understand.
Blockchain uses cryptography to provide security and establish a consensus on the circulated network. To demonstrate that a user has permission to add on the chain, elaborate algorithms must be used. These algorithms use huge amounts of computer energy. This entails huge costs in keeping the network up and running.
Blockchain is a valuable network and changes the way business is done, but the environmental consequences and energy costs necessary to safeguard and record all business activities can not be ignored.
Environmentalists are worried that the blockchain mine has upset the fight to combat climate change. They envisage a future in which the energy needs of the blockchain technology will explode while the cryptocurrency will continue to achieve mainstream adoption.
Because of the absence of regulation and supervision, blockchain-based value networks attract the influx of scams and manipulation. Regulation helps preserve the value of a currency and reduces the potential for cyber security breaches.
The lack of constant regulation causes confusion and healthy risks for investors that lead to extensive damage to the underdeveloped blockchain investment system
There is always the possibility of losing your investment when the government closes the online portfolio or exchange if suspected of illegal activities. Without a real state or international regulatory agencies, investors can easily be robbed without compensation.
Blockchain is slow
Due to the encrypted and disseminated nature of the blockchain, transactions take time to complete. Transactions with Bitcoin require several hours to be finalized. Surely you can not use bitcoins to buy a bag of fries for lunch.
The transaction chains have the prospect of becoming very slow as they increase in size. This also happens when multiple users access computers to solve algorithms on the network. This leads to a significant challenge of slow transaction confirmation which results in an increase in transaction fees.
The future of the blockchain depends directly on the feasibility and scalability of the underlying technology and the processing speed must be resolved before the cryptocurrency can become the traditional payment method.
Governments can silently want the blockchain to fail
Despite the great interest in embracing blockchain technology in the commercial sector, regulators would like it to disappear. Banks and agents make big profits from the game of intermediaries to millions of customers. For individuals, they seem relatively small, but add up to handle large companies.
Banks have the power and the ability to lobby for their interest with lawmakers and the government. If they had done so they would limit the convenience of the blockchain or reduce its usefulness.
The lack of standardization and regulation threatens to limit growth and discourage potential investors. Hardware and power costs are expensive, along with the speed and slowdowns of the audit, which add to the list of blockchain drawbacks.