- Jun 10, 2018
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What are Blockchain issues or limitations
Complexity:
Blockchain technology involves an entirely new vocabulary.
It has made cryptography more mainstream, but the highly specialized industry is chock-full of jargon. Thankfully, there are several efforts at providing glossaries and indexes that are thorough and easy to understand.
Higher costs:
Nodes seek higher rewards for completing Transactions in a business which work on the principle of Supply and Demand
Network size:
Blockchains (like all distributed systems) are not so much resistant to bad actors as they are ‘antifragile’ – that is, they respond to attacks and grow stronger.
This requires a large network of users, however. If a blockchain is not a robust network with a widely distributed grid of nodes, it becomes more difficult to reap the full benefit.
There is some discussion and debate about whether this a fatal flaw for some permissioned blockchain projects.
Slower transactions:
Nodes prioritize transactions with higher rewards, backlogs of transactions build up
Smaller ledger:
It not possible to a full copy of the Blockchain, potentially which can affect immutability, consensus, etc.
Transaction costs, network speed:
The transactions cost of Bitcoin is quite high after being touted as ‘nearly free’ for the first few years.
Risk of error:
There is always a risk of error, as long as the human factor is involved. In case a blockchain serves as a database, all the incoming data has to be of high quality. However, human involvement can quickly resolve the error.
Wasteful:
Every node that runs the blockchain has to maintain consensus across the blockchain. This offers very low downtime and makes data stored on the blockchain forever unchangeable. However, all this is wasteful, because each node repeats a task to reach consensus.
Human error:
If a blockchain is used as a database, the information going into the database needs to be of high quality. The data stored on a blockchain is not inherently trustworthy, so events need to be recorded accurately in the first place.
The phrase ‘garbage in, garbage out’ holds true in a blockchain system of record, just as with a centralized database.
