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Limitations of Blockchain
Complexity of Blockchain
Even though Blockchain technology has made cryptography mainstream, this highly specialized industry is still full of technical jargon. However, there were several successful efforts made to provide glossaries and indexes so we would understand it more accessible.
The 51% Attack
With the growing number of nodes or blocks in a blockchain technology, the vulnerabilities associated with the entire blockchain also increases. Among all the possible security flaws that can affect the blockchain network, there is one unavoidable security flaw.
51% attacks are among the most discussed. Such an attack may happen if one entity manages to control more than 50% of the network hashing power, which would eventually allow them to disrupt the network by intentionally excluding or modifying the ordering of transactions.
High Energy Consumption
In the case of Bitcoin blockchain, energy consumption remains one of the biggest issues with miners. Researchers at the University of Cambridge have estimated that Bitcoin consumes more energy than the entire nation of Switzerland. The energy is mainly fed to keep the entire network alive all the time. That’s just one blockchain, imagine the case if we have many more such networks.
Scalability
Blockchains, especially those using Proof of Work, are highly inefficient. Since mining is highly competitive and there is just one winner every ten minutes, the work of every other miner is wasted. As miners are continually trying to increase their computational power, so they have a greater chance of finding a valid block hash, the resources used by the Bitcoin network has increased significantly in the last few years.
Bitcoin works on Proof-of-Work model which is secure but slow at the same time. There is an alternative in the form of Proof-of-Stake, which is faster in validating entries, but is not regarded as an ideal option for distributed consensus protocol.
Lack of Skilled Technicians
There is always a risk of error occurring, if the human factor is involved. In case a blockchain serves as a database, all the incoming data must be of high quality. If all occurring events are not originally registered with accuracy, then the trustworthiness of the stored data could be seriously in doubt. In case unreliable, incorrect information goes into the blockchain, then unreliable, incorrect data will also go out from it.
Lack of Distributed Execution
Under partitioning, a distributed data system can either be consistent or available but not both at the same time. Blockchain gives up on consistency to be available and partition tolerant.
Viability and Sustainability
The strategic value of blockchain will only be realized if commercially viable solutions can be deployed at scale. The relative immaturity of blockchain technology is a limitation to its current viability. The misconception that blockchain is not viable at scale due to its energy consumption and transaction speed is a conflation of Bitcoin with blockchain.
The technical configurations are a series of design choices in which the levers on speed (size of block), security (consensus protocol), and storage (number of notaries) can be selected to make most use cases commercially viable.
Faster block-times
A consequence of fast block-time is reduced security, therefore many blockchain applications require confirmation for newly mined blocks to secure the transactions from double-spending.
Additional Challenges
Environmental Cost
Lack of Regulation
Slow and Cumbersome
“Establishment”
Risk of Error
Blockchain Bloat
Data Modification
Private Keys
Strategic Value
Common Standards
Advancement of Tech
Digitalized Assets
Network Growth
Political Aspect
Storage