Cryptocurrency prices are sliding and the world is arguing over the usefulness of Blockchain as a technology. The truth is that blockchain technology may not have taken off as much as it should have. Here are top 5 reasons why:
Blockchain is making claims bigger than it can handle
It is trying to replace systems which have worked over many years.
Is it better than SWIFT systems which handle the global banking transactions? How it is better than PayPal or other applications that take care of millions of processes and are quite trustworthy. Will blockchain be as big as the universal HTML or any other technology that forms the base of everything?
Well, that is what it claims to be, when in reality it is only another application powering certain niche industries.
Blockchain will do well if it brings down the hype and addresses real world problems of a scale it can handle. Today, the world does not have the energy or the computational power to make Blockchain a reality that powers global transactions.
The technology has inefficiencies built-in its definition
Blockchain is nothing but replication of a transaction across devices. That means one would need huge computation power.
The energy need is substantial.
It is said that Iceland will use more energy mining than powering all its households. It is an obvious wastage and one of the reasons it will draw attention from regulators. Besides, it is meant to store and verify every transaction that comes its way. It compounds the stress it puts on hardware and it definitely slows down the complete process. A transaction done through blockchain is many hundred times slower than what existings banks and financial institutes use today. They have no reason to switch over.
Unless we can develop effeciency within blockchain, this will be a major factor in its success or demise.
Blockchain is no substitute for real world trust
The reason why so many financial institutions appear to be backing out of the deal with blockchain technology is pretty clear: Blockchain continues to refuse to fall under the purview of traditional regulators. It promises to eliminate intermediaries in world where people know how to bypass systems or conduct deliberate breach.
Any computerized automation cannot replace human effort in doing checks and handling contingencies- atleast not yet. So the question is it too early for blockchain to disrupt these regulators?
Blockchain transactions take too long, preventing widespread application
While blockchain technology is certainly impressive, slapping transactions over an existing chain of transactions is a slow process.
While the entire process is veritably tamper proof, the sequence of events takes far too long compared to traditional banking, or other means of digital transactions. While banks handle hundreds of transactions per second, a single blockchain application may process just a few tens per second. This can be inhibitive for a fast paced market scene that requires real time transactions to take place.
Improper establishment of a learning cycle
The promoters of blockchain are not giving us enough confidence. If you do not learn from the mistakes of your predecessors, you are doomed to fail. This is true of ICO as well, which is why budding ICO founders would do well to take a look at how others have built their cryptocurrency and learn the reasons behind their failure.
Go through the roadmaps and product development cycles as well as existing whitepapers to learn more about their processes so that you can pick out the right path for your blockchain technology.
Our graphic on Jim Carrey explains the experience of early adopters of this technology.