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Challenges Of Blockchain
Blockchain is by no means a fool-proof technology; neither can it be applied in industries without a thorough cost-benefit analysis. As mentioned earlier, the cost of computing, energy consumption in mining for transactions becomes very high as the blockchain increases in size. Also, the growing size of blockchain can be a problem as any node will need to replicate throughout the blockchain, which may take a long time.
1. Speed
Currently, the maximum number of transactions supported in the public Bitcoin blockchain is 7 per second, with PoW and other validations in place. In the next few years, it's very likely that we will disrupt blockchain computing, and scale and speed challenges will be resolved.
2. Recourse/Modifications
It is virtually impossible to modify a transaction once it is put in place on the blockchain. While this is a benefit in many cases, the flipside is that even grave errors are fixed. Unfortunately, there is virtually no way to fix anything later deemed incorrect.
3. Private vs Public vs Mixed Blockchains
Public blockchains can scale but make processes slower. On the other hand, private ones can be faster, but then the use case for blockchain needs to be clear otherwise a simple shared database may work. Mixed permission-based blockchains are in relatively nascent stages as of now and will need work to become holistic solutions.
4. Adoption and Integration
The integration and replacement of current systems and workflows is the biggest challenge for any disruption. For blockchain to truly disrupt the ecosystem, consistent efforts need to be made for its correct adoption. Unfortunately, larger institutions like banks working on the same systems for years take time to adapt to any change.
5. Legal Challenges
For any disputes arising from blockchain transactions, there are various loopholes where the existing legal frameworks and courts may not be able to resolve the disputes easily. The legal framework for blockchain is yet to be fully developed in countries worldwide.
Kunal Nandwani
Kunal is a serial entrepreneur and serves as the co-founder and CEO of uTrade Solutions - an India origin Global Fintech product firm, Hashcove – a UK based Blockchain Solutions firm, and Cove Identity – an internet decentralised digital identity platform.
Kunal also runs a sustainability focussed crowdsourced initiative called Earthr Foundation. Kunal also cofounded Chandigarh Angels Network Prior to starting his own ventures,Kunal has worked with Lehman Brothers, Nomura and BNP Paribas in London. He holds a bachelor’s degree in computer science from PEC (India) and MBA from ESSEC (Paris). Kunal has written and published books on Blockchain & Bitcoin called "Squaring the Blockchain Circle" and on social impact start-ups “Sociopreneur: Zero to One”