Issues/Limitations of Blockchain Technology

There are issues/limitations currently in existence with this technology:

Complexity

Because it is new, this technology uses various terms, some of which might make it difficult for people to understand. There are various resources available to facilitate the study of this technology. However, at first, it might be very difficult for some.

Necessity for Large Networks

This technology works with a network of computers. A large network is required, to make the blockchain more powerful and effective. It does work with small networks, but it is very limited, and the full benefits of the technology cannot thereby be experienced.

Necessity of High-Quality Input

This technology requires high-quality input information. Since the user is not allowed to make changes, once entered, information is assumed to be correct.

Security Flaw

Blockchain is based on the 51 percent attack concept. It assumes that if 51 percent of users approve a transaction or change, it is appropriate, which might not be the case every time and could be a limitation. Even though overriding more than 51 percent of users is very difficult, it might still be possible.

Behavioral Change

Like any other technology, this approach requires a change in people’s behavior. Since this technology depends mostly on users, people need adapt to using block- chain.. Resistance to change is a part of the real world. Instead of using current technology, to ask people to change and start using blockchain requires strong motivation, and blockchain needs to improve the public’s sense of trust and security.

Scaling

One issue that mainly concerns the digital currency part of this technology is scaling. The process of validating and downloading the entire set of existing blocks can be very difficult for anyone who wants to start doing transactions right away. It takes hours to validate and download all the blocks, and since the number of blocks is increasing exponentially, this will be harder in days to come.

Bootstrapping

If an organization decides to move to this new technology, the transfer of current records to blockchain technology is very difficult, as it requires many migration tasks, which involves a great deal of time and money.

Government Regulations

Countries’ regulations regarding blockchain will always be an issue, because regulations will always exist to monitor blockchain technology, which is the opposite of the key characteristics of this technology. Many laws and regulations are being introduced around the world to monitor and regulate blockchain.

Fraudulent Activities

Since blockchain is pseudonymous, there is always the possibility of fraudulent activities using this technology. Managing these activities and allowing law enforcement agencies to monitor and prosecute them will be a challenge and an issue for blockchain.

Applications of Blockchain Technology

Blockchain has been very successful so far with digital coins, and it gained in popularity with the use of the platform for Bitcoin and other digital coins. Now, however, there is much discussion of where this technology can best be used. Programmers have found innovative ways to use the technology, because of its secure characteristics. The areas where blockchain technologies could be applied include:

Elections/Electronic Voting

Throughout the world, voting systems are very time consuming, as people must wait in line for their turn to vote in elections. Previously, and still in some countries, paper voting was the only option. Now some countries have developed electronic voting, but still people have to go to election centers to vote or send in their votes through the postal system. Blockchain can probably solve this problem in the near future. With this technology, votes can be recorded as individual transactions, and since the technology keeps a record of each transaction, they are very safe. This technology can also reduce the marginal error in elections and reduce the possibility of fraud, as well, because each user in the network can easily see the summary of all votes as transactions. More important, the increased ease of voting could also increase voter participation [30].

Traditional Financial Institutions: Improvements

With the introduction of digital coins, a big challenger appears to traditional financial institutions, mostly banks. To stay competitive, traditional banking has slowly been understanding the technology and trying to use it to better serve their clients and provide greater security. Research is ongoing by these traditional financial institutions to better understand how to use blockchain technology. Some primary ways it could be utilized include retail payments, consumer lending, and reference data systems. At this point, financial institutions take time to process every transaction, from sending money online or making purchases with cards. By using blockchain technology, these institutions could improve their processing time. Similarly, consumer lending by financial institutions takes a long time, due to all the paperwork and intermediate tasks, both of which could be substantially improved by using blockchain technology. As a further point, given the data involved with financial institutions, sharing information is not easy. But with the real-time information sharing technique used in blockchain, data can be shared very easily, as it is easily visible to anyone in the blockchain network.

Health Care Technology

Health care is another field where blockchain technology could be used, mostly to maintain patient electronic medical records and/or facilitate insurance claims. Medical records can be updated or entered in blockchain, which is very safe, and no one would be able to change the records, once entered. This also helps insurance companies, as every transaction has a timestamp, which could make insurance claims much easier, since the insurance company would have records of each diagnosis and when it was made. Health insurance companies could also use this technology to determine patients’ preconditions very easily. Also, using the smart contract aspect of blockchain technology would automatically determine payments and claims, thus reducing administrative costs and other costs associated with manual work [31,32].

Cross-Border Payments/Remittance

At present, the transfer of money internationally is expensive, error-prone, and an easy method for money-laundering. In addition, the whole process takes a long time. The use of blockchain could resolve all these issues, and transactions could be faster, cheaper, and more secure. One example of a remittance service provider using this technology is Abra. but many other businesses and organizations will probably take advantage of this technology in the near future [33].

Smart Contracts

“Smart contracts” are better ways to handle contracts using blockchain technology. Traditional contracts require a third party in an intermediary position. Smart contracts would eliminate the need for these third parties. Both parties signing a smart contract are always aware of the details in the contract and know when and how it will be implemented. These contracts not only govern the rules and penalties for each party, but also enforce them as appropriate. They have a good use scenario for individuals, businesses, and IoT devices [34].

Copyrighted Contents

Copyrighted contents could benefit quite a bit from blockchain technology. Right now, it is very confusing to know who are the owners of copyrighted materials and whenever a royalty must be paid to the author or the publishing company or the artist, for copyrighted materials. If the smart contract aspects of blockchain were used, all material would carry information about its owners, making it easy to pay royalty fees directly when needed [35].

Identity of Things

Blockchain technology can help in providing a seamless identity. In blockchain, identity is pseudonymous, meaning there is an identity but no need of name. Whenever a transaction is made, it is associated w'ith the identity, but without disclosing the name, unless the individual wants to do so. This way, everyone can have an identity in blockchain, which would enhance the global identity for every person in the world. This same identity concept can be used for products, packages, machines, and many other things. This is called the identity of things (IDoT). The IDot concept could play a very important role in supply chain management, or infrastructure. It could also make the shopping and retail experiences easier for everyone [36,37].

Internet of Things

With the invention of billions of devices in the world, the information collected by each device is scattered in various systems. Slowly, however, a need is developing to integrate all of this information, which is the Internet of Things (IoT). There is a need to save all this information, and blockchain technology is best suited for the task. As a distributed technology, using a large number of computers in a network, it provides extensive storage and bandwidth, and enhanced security, along with enhanced processing power. Traffic lights and rain gauges are examples of where this could be used.

 
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