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Till now, Everyone might have heard about Blockchain Technology which is currently the most popular technology around the globe. It is a decentralized, open-source platform that uses the public ledger to record the transactions.
Blockchain is the increasing list of records called as blocks that are getting linked and would be secured using Cryptocurrency. It allows peer-to-peer transactions without any involvement of the third party and also it makes manipulation of data too difficult due to which it’s getting adopted by many of the investors. Also, they charge fewer transaction fees and transactions can be completed in less time as compared to the time taken by the traditional banking system to process the transactions.
Blockchain was invented by Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the Cryptocurrency Bitcoin.
As we know, every technology has advantages but simultaneously also possesses some limitations that need to be considered while using that technology. Though Blockchain has come a long way and has already started for mass adoption, in some countries, they are still trying to make their place. in this article, we are going to explore Limitations of the blockchain technology and the Challenges of blockchain technology.
Limitations of the blockchain technology are explained below:
– Lack of Technical knowledge :
Despite Blockchain’s increasing popularity, still, many investors aren’t aware of all the technical terms and also there is no proper documentation that helps users get detailed knowledge. Due to this, investors are unable to ask questions directly or get their doubts resolved.
For example, ICO i.e Initial Coin Offerings which are used to raise capital using a non-equity process is still not known to many.
– Fewer people available with proper certification:
As compared to the demand for Blockchain nowadays, the experts in this technology are quite a few. People are available in the market that can provide knowledge for the blockchain but they are not aware of the technical workings of the system which is one of the reasons proving to be a blocker in its growth.
– Scalability:
This is one of the major limitations of the blockchain network as all the transactions performed on the network need to be verified by each of the nodes. Due to this, the speed of processing transaction gets limited. Still, they are working on Distributed Ledger technology which is based on blockchain like Hyperledger Fabric to overcome the Scalability issues.
– Less Privacy:
As it is a distributed ledger, though identities are anonymous but still with the transaction patterns it is possible to link the user identity with that address and can get information about the user.
– Security Concerns:
Blockchain is the network of people. If more than half of the people become dishonest and get in favor of manipulation of data, then that lie becomes the truth which could be one of the major reasons for the complete network failure. So, they need to closely observe to avoid misusing the data and to ensure security.
– Complexity:
Blockchain technology is not easy to understand for beginners as it involves a lot of mathematical calculations. It can’t be understood overnight as it’s a bit complicated industry.
– Increased Transaction cost:
In the beginning, transaction cost is almost free but as the network grows, transaction cost keeps increasing.
– Manual errors:
Manual errors can lead to outdated log information or even create mismatching data while entering the data into the database. To make sure the data entered is correct, that data needs to be validated. Due to this, the phrase ‘garbage in, garbage out’ is used in the context of the blockchain.
Let’s move to the Challenges Of Blockchain Technology …
– Initial Costs for Setup
Setting up blockchain for the very first time is very expensive as it is developed for a specific firm and therefore it is expensive to purchase or develop in-house. Also, after setting up, experts are required to fulfil the requirements and as we know demand is high but very few resources are available. So, organizations are paying high to hire qualified resources.
– Consumption of Energy
Miners spend a huge amount of computing power to solve the computations via proof-of-work algorithm to verify and process the transactions making it highly Energy-consuming.
– Integration with the legacy system
Blockchain is running on the latest technology but it’s too difficult to get it synced with older systems as those systems or software need to be modified to incorporate the changes due to which overhead cost is increased to meet the blockchain requirements. Thus, it might take a lot of funds or human expertise and also it is a time-consuming process.
– Security and Privacy
As mentioned before, Blockchain is a secure platform as transactions are visible only to the people on the network but still if the majority of people are in support of false practices, it can be an issue for the system. Thus, it is one of the issues that need to be reviewed by the blockchain community to avoid manipulating or misusing data.
– Public Awareness
Though many investors have started investing in blockchain still there’s a long way to go for the Blockchain to be fully adopted by the masses. Still, there are people in the world unaware of the usage, features and many more benefits of Blockchain, which they can get if they use this technology. Thus, to overcome such things, they need to take some strong initiatives to increase the awareness in the public of blockchain technology.
Despite all such limitations and challenges Of Blockchain Technology, Blockchain stands Strong and with the increasing numbers of Blockchain adoption day-by-day, it’s highly expected of the Blockchain-based future.
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