The Challenges of Blockchain

Performance And Scalability

As blockchain are built around the adoption of using cryptocurrencies such as Bitcoin, this has raised concerns from the public community about whether the level of scalability is sufficient in supporting the increases of its operations. As the number of transactions grows, so does the size number of blockchain transactions. With a maximum size limit of ‘1MB’ as of 2017, this has brought forward the issue that transactions are being limited to a ‘through-put [of] 2–4 transaction/sec”. Thus, observing this restriction to the current number of Blockchain wallet users, as of the 1st of September 2018 to be around “28.1 million users” (Blockchain, 2018) — reveals that each user is only given the capability to send around “10 transactions every year”.

Privacy and Security

Driven by the ideology that blockchain is a database of information, similar to the cloud technology, where information stored is no longer in a single location, when compared to using a third-party financial intermediary, but across an array of data servers and Internet of Things (IoT). This has sparked particular interest and concern from organisations and individuals about the loss of control of their data they have provided, which are stored on, and accessible on the public ledger.

Infrastructure Related Costs

Despite adopting blockchain technology which brings about long-term benefits with regard to productivity, efficiency, timeliness and reduced costs, it involves high initial costs while putting it in place. This is due to the fact that the software required to run the blockchain technology in organisations must typically be developed for the specific firm. This software happens to be expensive to purchase, acquire or to develop in-house, resulting in increased costs.

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