The often discussed topics around Blockchain has been the actual adoption of the technology and its speed of adoption by industries. Of all the industries, Consumer products and manufacturing have the highest adoption statistics based on a survey by Statista where 29% of companies have deployed blockchain projects and using it. This is followed by the Lifesciences industry where 23% of companies have projects in deployment and using it in their business.
While those numbers are still encouraging, for blockchain enthusiast, it is still a distance to pursue to garner large scale adoptions. So why is the blockchain adoption slow?
Let’s look at some situations that may be playing a role.
42% of firms pointed at scalability as a major issue, while only 7% of dedicated blockchain technology companies cited it as a major issue.
One of the key technical limitations of Blockchain is its scalability, where it has been reported that with high usage, the capacity to scale up is challenged. The networks in this technology work through a consensus mechanism that would require each node to verify a transaction. This process may slow down the network, and limits the processing of the total number of transactions. In a study, 42% of firms pointed at scalability as a major issue, while only 7% of dedicated blockchain technology companies cited it as a major issue. The other issues around the technical capacity are data storage issues, the absence of formal contract verification protocols, and the lack of privacy.
Tip: Check with your Blockchain technology providers/teams if they have specific solutions to counter the scalability and speed issue.
What happens when the number of players in the blockchain space increases, including the number of networks? With the lack of existence of standards that allow the ability to interact with each other, the worries related to blockchain coders, and developers may grow multifold and could be a real challenge for IT teams. In most blockchain projects, there will be the use of multi-range platforms with several coding languages, protocols, consensus mechanisms and privacy measures. There is definitely a need for standardization to overcome this challenge. Thus organizations that intend to adopt blockchain projects need to have the clarity with their implementation partners/teams, on how to handle the interoperability and standardization issues.
Tip: Question your blockchain experts/providers, how they intend to solve them interoperability and standardization challenges.
Most executives cite regulatory issue being a roadblock in the adoption and greater investment in blockchain technology. Methods like cryptographic signatures, smart contracts are not included in the current regulatory systems, and addressing those areas in times of a problem could get tricky, and complex. Policy changes would require government intervention and would need quick implementation to give way to mass adoption. Good news is many state legislatures in the U.S have passed bills that address the blockchain technology needs and there are working groups founded by federal regulators to examine the loopholes and gaps.
Tip: Explore if your blockchain team or provider has a thorough understanding of government regulations that are being addressed through the bills.
The growing number of decentralized applications and the effect on privacy and security of blockchain has often been questioned by many. From the vulnerability possibility of the consensus mechanism to unauthorized access to a user’s private key because of the lack of generating enough randomness, the gaps could be many. Some other loopholes could be a leak of transaction privacy, vulnerabilities in smart contracts, ransomware, underground markets, and money laundering and many more.
Tip: Consult with your security and data privacy experts, and discuss with your blockchain technology teams/providers on how well equipped they are to handle the vulnerabilities, and breaches both from preventive, and treatment perspective.So while the hurdles in blockchain implementations are not an exaggeration, but the tactics to address the challenges are definitely possible and do exist. Organizations that are considering the implementation of blockchain technology to improvise their business systems and processes, need to point out their concerns clearly so the optimum resolutions can be found.
