Since the emergence of Bitcoin in 2009, blockchain has become a buzzword for enterprises. Fascinated by this nascent technology, many startups, and industry giants are testing the waters of blockchain and are exploring its application within their respective fields. While there is no doubt that this technology is one of the revolutionary innovations of recent times, many entrepreneurs are still reluctant to invest in it. This is because there are still a few challenges associated with this technology that needs to be surmounted.
In this article, we are going to discuss such barriers that are preventing the widespread adoption of blockchain in the industry.
- The Initial Setup Costs
Though blockchain comes with many long-term benefits in terms of efficiency, productivity, and reduced costs, the initial cost to incorporate this technology is quite high. As the software needed for blockchain set-up must be developed for the specific firm, it is expensive to buy, acquire or develop in-house.
Also, the businesses may need to have specialized-hardware and qualified personnel to work in tandem with the technology. However, as blockchain space is still relatively new, the proficient professionals in this field are few and far between. Thus, to hire a qualified individual, organizations must be willing to pay a hefty salary which is out of reach for start-ups and most small and medium-sized businesses.
- Lack of Understanding
Despite being the buzzword of the business world, blockchain is still not completely comprehended by the public. Though it is transforming every industry, the knowledge of its potential is still limited to those who are involved in the technology space.
Also, there are still a lot of myths and misinformation. For instance, many people still don’t yet know about the application of blockchain technology outside the financial sector. And many still believe that blockchain is a synonym for bitcoin. For the mainstream adoption of blockchain, the public needs to understand the technology first. The better understanding of blockchain will lead to an increase in willingness to utilize the technology.
- Privacy Concern
The application of blockchain technology for managing data can be a double-edged sword in many ways. As blockchain is public, every transaction recorded on the blockchain will be visible to everyone. On one hand, it could be beneficial for tracking and auditing to comply with data protection and privacy legislation. But on the other hand, it makes it impossible to modify any entered data in the blockchain. No doubt, it’s a crucial feature in the case of bitcoin and other cryptocurrencies.
But when it comes to sensitive data that needs robust privacy requirements, putting so much information in the public domain runs against longstanding norms. And no organization can function without privacy. The consumers trust a company with sensitive information. So, if all their data are stored in a public ledger, it will hamper their privacy.
- Security Issues
Blockchain technology still lacks in many technological ways and it has a few security loopholes. The 51% attack is one of the security flaws of the blockchain network in which hackers can exploit the network the way they want and can even alter the transaction process. This can stop other people from generating a block. Moreover, there are no specific regulations when it comes to blockchain and this grey area is affecting the adoption of technology.
- The Bad Reputation
When blockchain entered the market, its anonymous feature attracted not only the experts and crypto enthusiasts but also criminal personals. Why? Well, because of the decentralized nature of the blockchain network, no one can know your true identity. And this is the reason why bitcoin has become the primary target in the black market and the dark web. Criminals are using the cryptocurrency to buy limited illegal equipment and sometimes they even ask cryptocurrencies in exchange as a ransom. This increasing criminal association with blockchain is also making people think twice before investing in this field.
For a small number of users, the blockchain functions well. But when the network is staked with too many users, it slows down. The more the network grows, the slower it becomes. And the longer it takes to complete a transaction, the higher the transaction costs become.
Though many investors are investing in blockchain, still there’s a long way to go for the technology to be fully adopted by masses. The above-mentioned challenges clearly highlight the need for technological improvements in the blockchain sector. So, if you aspire to use blockchain for your business, it is recommended to consider the perks, challenges and long-term benefits beforehand.