3 Major Reasons Behind Doubts About Blockchain

Blockchain has disrupted a lot of operations spanning a multitude of sectors. Governments, businesses, the music industry, and even the cattle economy have been affected by it. But given the number of advantages that it has, which is evident in how many companies are adopting it, why are there people who are still dubious of the technology?

There are three main reasons why this is, namely lack of regulation, concerns about cybersecurity and the infancy of the technology.

One of the reasons why regulations are still taking shape is directly related to how young blockchain tech is, relatively speaking. Legislators are still trying to figure out the best way to create a legal framework that will protect companies and consumers while fostering the growth of the innovation.

Haste makes waste, as the saying goes, and that is true in this context. A regulation hastily drafted and implemented will stifle the development of blockchain. But a loose regulation will see malicious entities taking advantage of this loophole. With this, careful planning is needed in order to find the right balance for the job.

There’s also the fact that blockchain technology is quite difficult to grasp. Eva Kaili, a member of the European Parliament and its Industry, Research and Energy Committee, even admitted that because of the complicated technology behind blockchain, politicians are finding it difficult to understand exactly how it works.

The next reason is cybersecurity, which is also directly related to the nascent nature of blockchain. To be able to create a sturdy defense against cyber attacks, developers first need to know how hackers operate.

But because blockchain is still expanding at an exponential rate, with varying versions coming out almost on a daily basis, cybersecurity is playing catch-up in the information update. Given the fact that “traditional” cyber defenses are also changing, the issue is rendered even more complex.

And now for the real culprit. One of the things you have to remember when dealing with new technology is how developers will improve its existing system to a point that it becomes stable and self-sustaining. Let’s take Bitcoin, for example, a cryptocurrency born from blockchain tech.

Bitcoin operates using a digital ledger in which all information and transactions are stored inside a block. Whenever a new block is created by miners – people who create Bitcoin by acting as verifiers for each transaction done – the brand-new block is slotted into the existing ones, essentially creating a succession of data, hence the name blockchain.

However, there are thousands upon thousands of transactions done each day, which means a ledger can grow pretty fast. The longer the ledger, the harder it is for miners to follow the mathematical equation needed to create another block.

It got to the point that the Bitcoin chain is so massive that a single transaction is estimated to cost an energy consumption equal to a month-long power allocation for an average house in the Netherlands. That is a ridiculous amount of energy for a single transaction alone. Because of this, some cryptocurrencies are separating from this algorithm – hard-forking, as the crypto sphere calls it – and developing ones that are sustainable and scalable.

Those who are skeptical about blockchain are trying to observe how it will overcome these obstacles along the way. However, these skeptics are in danger of getting left behind by their competitors who are already implementing it in their systems.