There has been much coverage seen in the technology press nowadays about the recent emerging technology, generating huge interest in various industries: block chain and its ecosystem. In my previous posts for the blockchain week at www.TheBlockchainAcademy.com, we have mostly come across the potential of this technology to transform the ways industries and professionals are working, including educational sector, legal sector and medical care. However, can blockchain solutions overreach in future, and does it entail some challenges we can’t see at the moment? Is the block chain technology just a hype or a reality? I tried to find the answers, shared in this article.
The blockchain solutions emerged with the name of web-based distributed ledger system where applications can be developed on, to achieve higher data integrity, give time-stamped attribution and verification and amplify the efficiencies via automation.
The blockchain is the public ledger of all bitcoin (cryptocurrency) transactions that has ever been used. It is continuously growing as completed blocks are integrated to it with the new recording sets. The blocks are incorporated to the block chain in a chronological and linear order. Every node (computer linked to bitcoin network using a client that carries out task of authenticating and relaying transactions) gets a replica of the block chain, which is downloaded after being a part of Bitcoin network, automatically. The blockchain bears full information regarding the addresses and their balances right from the most initial block to the completed block completed recently.
The blockchain technology has already started to portray its potential and capabilities and increasing number of giant enterprises and states are interested in investing in the technology. However, like every technology, the blockchain must not be free from down sides or certain challenges, which must be understood and encountered through pro-active approaches. No matter, the technology has brought various notable changes in industries like education, healthcare, banking and law, yet there are still certain limitations with the technology that must be considered before it is widely recognized and deployed. In industries like banking, initial testing has brought successful outcomes.
The CIOs of today need to have insight of the technology, as there are some real advantages that are starting to emerge through these testing and initial deployments.
The decentralized approach of Blockchain technology
Most of us want to decentralize all the things, overlooking that most of these things are already decentralized. In this view, many people forget that our economy is already decentralized. With Bitcoin and the internet connection, anyone is able to come up with his start up selling anything. This takes an already-decentralized economy and takes it up to certain services need customers to escrow their bitcoin, which might necessitate the creative use of reputation, multisig, fidelity bonds, insurance, etc. Lastly, there are certain business arrangements that are just impossible in absence of a trustless escrow. These services can use Truthcoin (and tap the reputation dimension of the ownership).
Unless you are able to see another dimension of digital scarcity, blockchains are not worth of the effort. Just go for a startup instead. You can adjust your service offerings and prices flexibly as you see fit. Even though there are drawbacks, and gaps needing closure, the rapidly developing blockchain eco-system is tackling these gaps to trigger further blockchain acceptance and deployment.
When we claim that blockchain is not an efficient model, it doesn’t imply that software is an inefficient model. Our world has many software businesses. Facebook/Google run the operations in almost the same way as Bitcoin: a group of professional programmers meeting to collaborate on the software. New software may be sold for Bitcoin, or used for developing a business that earn Bitcoin. However, the “tech will be improved” doesn’t change the relative drawbacks a blockchain has for the firm.
The uncertain regulatory position is also an issue. Since modern currencies have always been made and regulated by the national or federal governments, Bitcoin and blockchain encounter a hurdle in its widespread acceptance by pre-existing financial entities, if its government regulation position remains unsettled. In addition, the huge energy consumption is there.
The bitcoin blockchain network’s miners are trying 450 thousand trillion solutions every second in an effort to validate their transactions, using huge amount of computer power. Lastly, we have a concerns regarding security, privacy and control. While solutions are there, including permissioned or private block chains and great encryption, there are still some cyber security issues that must be addresses before blockchain solution is entrusted by the general public.