More and more startups are trying to disrupt current technologies by implementing blockchain technology. Do we really need it?
Blockchain is the hot new thing in the technology field. A quick Google search will inform you that blockchain is the tech solution for everything from your last will and testament to social media, and much more.
Recent application options have been proliferating. In the financial sector, Bank of America has recently filed for nine new blockchain patent applications, and news outlets report that a majority of banks are looking into some form of blockchain application.
In the medical field, with social media, dental care, information technology, blockchain appears to be a viable technological solution for industries everywhere. The call for programmers comfortable with blockchain coding is everywhere.
Companies are popping up all over the place looking for ways to utilize blockchain. But, as with every other technology, the question about genuine viability remains - Can blockchain technology really replace traditional technology methods?
Blockchain Benefits
Immutable - Blockchain presents a number of benefits for technology needs. For starters, entries on a blockchain are immutable. Because the blockchain is made up of a series of blocks linked together, and because each block is inextricably linked to the block before it and after it, change is impossible once data is coded into the blockchain.
The applications for this should be obvious. Consider financial data. Once an entry is coded into the ledger for a bank, it cannot be altered in anyway. There can be no change without the authority of the one who originally coded the block. Bank ledgers would be absolutely impervious to change, and completely and easily auditable.
Distributed - Blockchain removes centralized hubs in whatever field it touches. The power of the blockchain creates peer-to-peer networks that are shielded from weakness or failure at a single access point like a traditional system.
Because each user has access to the full database, all users are able to speak to one another and transact with one another without a central hub, but with full confidence in the reliability of the data.
Again, the applications are almost limitless. Consider real estate transactions, for example. The blockchain would remove the centralized broker hub, creating a platform where buyer and seller can interact directly, saving both money and time. And all transaction details would be immutable and reliable.
Secure - Information on a blockchain is protected by keys that are coded directly into blocks at the time of their creation and addition to the chain. Data is distributed over all nodes, and the information cannot be gathered and accessed without permission from the original coder who holds the key. In this way the data is both completely secure and completely private.
Again, consider the applications for secure file transfer. A user can send information to another user with absolute confidence that the information cannot be accessed by anyone besides the intended recipient who holds the key.
Blockchain Weaknesses
However, for all its strengths, blockchain technology also has a host of weaknesses.
Speed - Blockchain technology is notoriously tedious. Coding a block onto a chain can take an extensive amount of time, depending on the way that the block is being added. For example, Bitcoin functions on a ‘Proof of Work’ system, where a block cannot be added to the chain until a ‘miner’ solves a complex mathematical problem. Only when the problem is solved can the block be added.
This brings substantial issues for applications like messaging, for example. Consider the lengthy time delay between users as messages are coded into the chain. Though completely secure, the process would be tedious and cumbersome.
Scalability - Blockchain technology has notorious scaling issues. Block size (that is, how much data can be stored on any given block, and therefore how many transactions the block can carry) is limited to original coding. As throughput increases, maximum block size is reached and any change to the system requires a hard fork.
Consider the example of the financial sector. Enterprise-level banks and credit card companies process millions of transactions per hour. Blockchain scalability issues mean that companies cannot grow or increase transaction throughput without a complete reset on blockchain rules.
Complexity - Blockchain technology is not easy to understand. Even the most simple explanations can leave the less technical among us completely lost. A first level explanation is not too complex, but when a bank is using the technology to take care of your money or manage your credit card bill, things start to get more serious.
The complexity challenge is far more difficult to surmount than it may first seem. Companies that deal directly with consumers need solutions that are simple and user-friendly. Blockchain presents a series of complex interfaces and technical jargon that may frighten users.
Blockchain technology is here to stay, and it certainly will replace some traditional technology. However, blockchain may not be ideal for every tech solution, at least in the near future. Companies must be prepared to analyze the pros and cons of their technological issues before implementing blockchain solutions.