Blockchain will be around for a long time, but in what form will it take? Who will benefit the most from blockchain? And who will be the most affected? Let’s take a look at what we’ve got.
Some have referred to blockchain as a “trustless” network. This statement, however, does not imply that the parties involved in the economic transaction do not have faith in one another. Of course, because of improved security and traceability, blockchain is much more acceptable than it was a few years ago.
More business investment is rapidly expanding as blockchain becomes more acceptable in terms of security.
According to Statista, by 2024, global spending on blockchain-enabled solutions will have tripled, reaching $19 billion, up from $20 billion in 2021. By addressing two critical business needs: transaction processing and record-keeping, this distributed ledger system provides secure data encryption and excellent fraud prevention. So, given all of this, why are some companies or individuals hesitant to use blockchain?
To begin, there are numerous advantages to using blockchain technology
Every business can benefit from technology by reducing paperwork, lowering costs, speeding up procedures, and eliminating the need for third-party facilitators. Furthermore, businesses can improve their operational efficiency by utilizing blockchain to its full potential.
1. The first step is decentralization
Participants in a distributed network don’t have to know each other, and they all have access to the same data, which is presented as a distributed ledger. Blockchain is a trend that isn’t going away anytime soon.
2. The concept of impermanence
Time and date stamps make data tracking easier in the long run. As a result, blockchain ensures the accuracy of data audits.
3. Information protection
The likelihood of hostile intruder assaults is at an all-time low thanks to the strong encryption and rapid recording. In any case, compared to dedicated server systems, hacking such a network is far more difficult.
The ability to conduct transactions quickly has become more useful and productive as a result of the removal of facilitators. In addition, blockchain allows for automated data aggregation, reporting, and auditing. As a result, businesses, especially those in the banking, financial services, and insurance (BFSI) industry, can save money on operating costs.
5. Traceability is number five
Retailers must be able to track the origins of their products and better manage their inventory. Furthermore, because of the openness that blockchain can provide to the supply chain, environmental pollution will no longer be an issue.
6. Lowers operational costs by reducing security risks
Security By causing disruption and business change, blockchain technology helps businesses reduce security risks and operational expenses. Companies considering blockchain adoption must examine a better methodology and assess available resources in the same way they would with other technologies.
Limitations of blockchain deployment
It’s critical to understand the challenges that come with its implementation as well as the technology itself before deciding whether or not to deploy it.
1. Scalability Issues
The more individuals or nodes that participate in a transaction, the slower the transaction will be.
As an example, consider the following:
At the moment, Bitcoin can only process about seven transactions per second, whereas some centralized payment systems can process tens of thousands. Visa, for example, claims to process 1,700 transactions per second, while Mastercard claims to process 5,000 transactions per second.
The controlling unit in a centralized design does not notify other members of transactions, which increases speed. On the other hand, on the blockchain, the transaction must be approved by a majority of nodes.
As a result, businesses should consider the performance aspect before using blockchain-enabled products. Unfortunately, the slow capacity does not appear to be CRM-friendly.
2. The Implementation Challenge
It all boils down to the initial cash outlays. For some businesses, implementation costs may be prohibitively high. Despite the fact that the majority of existing solutions are free, there are costs associated with licensing, overall maintenance, and more.
It may be preferable to postpone the implementation of blockchain if organizations are unable to allocate significant funds.
3. There is a scarcity of talent in the pipeline
The demand for high-skilled blockchain developers is expected to increase by 300-500 percent each year, according to estimates. It is a global issue that affects countries all over the world, from the United States to Singapore.
Because this technology is still in its infancy, it will take some time for the development community to put together appropriate instructional programs and alleviate market demand.
The blockchain ecosystem
Individually owned private keys may become a weak spot in a decentralized environment. They provide access to all data stored in a wallet once they are generated during the wallet creation process. As a result, data theft is a concern.
If your Blockchain wallet is lost, you will never be able to access it again.
4. Legacy System Compatibility Issues
If the blockchain solution is integrated with existing legacy systems, there is a risk of data loss or corruption.
5. Excessive energy consumption
Prices are only going to rise as the resources required to cool down the equipment increase. The heat is effective in the winter (if there is snow) and warms the garage (and part of the house). However, if proof-of-work is your only option, you’ll have to cover the cost of cooling with energy costs.
Is It Better To Be Or Not To Be On The Blockchain?
Blockchain may cause temporary business disruptions due to its limitations, which include issues with scalability, implementation, private keys, integration with legacy systems, high energy consumption, and a lack of developer talent.
Always consider all options when deciding whether or not to commit to the blockchain.
Learn more from Blockchain and read 8 Ways Blockchain Will Change the World in the Future.