Blockchain technology promises to improve the security of our personal information, to improve healthcare, and to even make the food we eat safer. Industry forecasters expect to see steady blockchain growth in healthcare, finance, and in a myriad of other industries.
And yet, blockchain adoption challenges seem to lurk at every turn. The list of problems that the blockchain industry must overcome is formidable. Here, we examine 7 of the most pressing issues that developers face and will, inevitably, overcome.
7 Blockchain Implementation Challenges
1. Energy-Hungry Consensus Mechanisms
The consensus protocol of Bitcoin and many other blockchains may be the greatest obstacle to widespread adoption.
In 2017, Bitcoin mining consumed the same amount of energy as the entire nation of Denmark. Obviously, we have a problem.
If blockchain is to mature, the current consensus protocols must be replaced with solutions that do not require power-hungry server farms. What those solutions may be is yet to be seen, but herein lies a great opportunity for innovation to take DLT to the next level in its evolutionary process.
2. Lack of Skilled Developers
If the lack of skilled blockchain developers does not surprise you, perhaps it should.
Ranked among the top 20 fastest-growing job skills, the number of blockchain positions available in 2018 increased more than 200% over those in 2017.
With around 23% of large companies actively exploring distributed ledger technology, you might think the market would be flush with eager candidates. Not so.
On the contrary, having a sufficient pool of qualified developers is a top industry concern. The lack of training programs has left this emerging market in a talent glut.
Fortunately, with more courses coming online, the developer drought may be nearing an end. Even so, smaller companies will be challenged to offer the competitive compensation packages that will be required to lure and retain top developers.
3. Blockchain Over Regulation & Under Regulation
The question of whether or not to regulate blockchain technologies comes down to whom you ask.
If you ask the Bitcoin market, government regulation of blockchain technologies will put the brakes on innovation and adoption. If you ask some legal experts, regulation is the only thing that will ease uncertainty and encourage adoption.
It’s all a matter of perspective. But most honest thinkers will agree that some regulation is necessary. It is only when discussing where and how much that disagreement ensues.
Meanwhile, governments around the world are exploring the need to regulate blockchain — as soon as they figure out what it is.
The challenge to all blockchain stakeholders is to help shape government and other agency regulation so that whatever rules emerge make sense for all concerned.
Consortiums of government and industries are already forming to address regulatory issues. They have their work cut out for them.
4. Standardization Adoption
Imagine the Internet without protocols. It would be like the 90s all over again. Browser compatibility, cross-platform multimedia, and email between Gmail and Yahoo would be a nightmare.
Such is the challenge facing the blockchain industry. As sectors such as automotive make their foray into DLT, ensuring that blockchains offer an industry-wide benefit will require collaboration on a scale rarely seen.
When do private blockchains make sense?
When should organizations build public blockchains?
How can the two be integrated to avoid siloed data, which DLT is meant to avoid?
These are the questions developers and industry leaders face in the year ahead.
Some people believe blockchains are slow. Not so. Small-to-medium size DLT networks can boast transaction speeds that exceed conventional databases.
When transaction speed becomes an issue is when you scale up to thousands of nodes or try to execute high-volume transactions.
For example, Visa processes around 2,000 transactions per second (TPS). Ethereum currently taps out around 15.
Bottom line: try running a Visa-like application on Ethereum and you won’t get far.
Obviously, if blockchain is to play with the big boys, it has some work to do. Maintaining the inherent advantages of DLT, while making it robust at high speeds, is one of the greatest problems with blockchain facing developers today.
6. Questionable Security
The fundamental structure of blockchains was believed to be secure.
The only formidable threat was thought to be what’s known as a 51% attack, and it was merely theoretical.
That is, until January 7 of this year, when someone successfully gained control of 51% of the Ethereum Classic network and rolled back transactions to their own profit.
Great. What do we do now?
That is the question blockchain advocates have been left to answer. And while it is unlikely that larger networks would be vulnerable to such an attack, till a few weeks ago, the general consensus was that it couldn’t happen at all.
Even so, DLT is regarded as one of the most secure ways ever devised to store data. DLT has already made a reputation for providing secure asset management solutions — an industry that doesn’t like to gamble.
The greatest threat to security lies not in blockchains, but in the application layer, where third-party security vulnerabilities can lurk without detection.
Integration of DLT solutions with legacy systems poses a tremendous hurdle for the industry. Not because the technical hurdles cannot be overcome, but because there are relatively few use cases where it has been done.
Fortunately, developers are targeting this end of the market.
Those that specialize in interfacing blockchain with healthcare and finance platforms will reap the greatest rewards.
To sum up
In many ways, blockchain is the awkward kid that came to the school prom without a date. It might not be very attractive right now, but be careful. When it comes into its own, you will regret not asking it to dance.
You can be sure, the blockchains of tomorrow will bear little resemblance to those of today. Of course, the immutability of chained data will still be there, along with permissioned access and traceability. But that may well be where similarities end.
Somewhere along the way, consensus protocols will emerge that will not tax the planet’s energy grid. Industry-specific standardization will streamline the R&D process. And, perhaps most important, blockchain will gain widespread acceptance.
The blockchain technology problems of today are the very stepping stones that wise companies will build upon for tomorrow’s success stories.