Every decade, the world is introduced to new technology. This decade is marked by the advent of blockchain technology, which is being hailed as a revolutionary technology. While the technology is primarily used for Bitcoin, it has been instrumental in changing people’s perception of money and its storage and transfer.
However, it is not merely due to bitcoins that blockchain is being hailed as a disruptive technology. Rather, it the possibility of applying the technology beyond transferring and receiving bitcoins that has got technologists excited about blockchain.
Today, the start-up fever has gripped the world. In some countries, like the US, Israel, and the UK, start-ups are disrupting their fields, and many are using blockchain technology. While industries, such as healthcare, finance, cyber security, and cloud storage, are adopting blockchain, there are a few computing challenges in blockchain that are preventing its widespread adoption.
High Initial Expenses
In the long-term, organizations will benefit from blockchain technology as it helps to improve productivity, timeliness, and efficiency while reducing costs. However, the initial costs to incorporate blockchain in an organization are expensive.
The software required to run the technology will have to be developed specifically for the organization and can prove to be extremely expensive. Organizations will have to incur more expenses to buy and install the specialized hardware required to run the software and blockchain technology. These are not the only costs that organizations will have to incur. They would have to find the right professionals, who are well-versed in the technology, to use the software optimally. Blockchain technology is still in the nascent stage, and there are limited professionals with the right knowledge. These professionals command high salaries that organizations will have to foot if they want to hire them.
The high initial costs to set up the system put blockchain technology out of reach of SMEs, who cannot afford to spend money like this.
Integrating with Outdated Legacy Systems
If an organization wants to adopt blockchain technology, it will have to upgrade its existing computing systems. If it does not want to upgrade the system, it would have to find a way to integrate blockchain with its outdated legacy systems. It is prudent to note that blockchain may not be able to handle all functions that an organization requires and hence, doing away with the legacy system is a pipe dream.
Hence, to ensure blockchain technology functions seamlessly, the current systems and software would have to undergo change, which would require the organization to invest a lot of time, money and professional expertise.
In most cases, it may not be possible to integrate blockchain technology with the legacy systems. Hence, companies that want to benefit from the technology would have to invest in new systems that are compatible with blockchain. However, it has been observed that most organizations do not want to transition to blockchain as it requires strenuous and careful planning and investment of time and money for the technology to be successfully implemented throughout the organization.
High Consumption of Energy
Bitcoin and Ethereum networks make use of proof-of-work to validate any blockchain transaction. The proof-of-work system requires complex mathematical computation to verify as well as process transactions. A lot of computing power is needed to do these calculations, and this means use of large amounts of energy. Also, the computers also need to be cooled down so that they don’t burn up. This too requires a lot of energy.
The World Economic Forum had published a white paper in 2017 that stated that the bitcoin network required as much energy as that is required to power 700 homes in the US at the low end of the spectrum. However, at the high end of the spectrum, the network needed as much energy as that used by the entire island of Cyprus. The white paper went on to mention that this massive consumption of energy was by design as it helps to keep the network secure and the nodes honest.
The massive amounts of energy needed to run blockchain is a major deterrent, and this is the reason many organizations are laying more emphasis on finding sustainable methods to do business. Today, climate change is a significant cause for concern and using large amounts of energy to run operations does not justify it.
To combat high usage of energy due to the proof-of-work system has prompted the Ethereum network to delve into the proof-of-stake system. The network found that this system requires less energy to operate and as a result, the Ethereum network is moving to the proof-of-stake system.
Privacy and Security Concerns
Blockchain was designed to be visible and available for public scrutiny. A blockchain can be accessed by anyone who has made a transaction on the network. When it comes to cryptocurrencies, this feature is essential. However, for organizations and government agencies, it raises concerns about security and privacy.
Governments and companies want to protect their data from outsiders and also restrict access on a need-to-know basis. Hence, when it comes to sensitive data, presently blockchain is not equipped to handle it. This is one of the major challenges in the adoption of blockchain among organizations and governmental agencies.
The public at large is not aware of blockchain and how the technology can be used. For the technology to become mainstream, it is crucial that the public acknowledges and accepts its benefits. While the blockchain technology can revolutionize industries, the benefits of using distributed ledger are not widespread and restricted just to organizations that are using the technology.
For most people, blockchain is the same as bitcoins. Of cause, blockchain technology is used for building crypto currency software, but it can be used also in many other spheres. It is essential to understand it for mass adoption of blockchain. This will be possible only if the public realizes that there is a big difference between cryptocurrencies and blockchain. Once people see the technology on its own, they will be more conducive to using it. Until then, it will be a distant dream.
Also, blockchain proponents have to work hard to remove the current computing challenges to allow different sectors to adopt this technology without incurring a lot of expenses.