Can Blockchain be too smart for massive adoption?
Blockchain uses cryptography to link records back to each other, creating a transactional data chain that is famed for being hard to hack and specifically secure.
Business Insider reports that Distributed Ledger Technologies (DLTs) like blockchain and smart contracts stand to save the Financial Services (FS) industry up to $50 billion a year through improved operational efficiencies, reduced human error, and better regulatory compliance.
Overall adoption is still low because of organizational and technical hurdles but according to Statista, nearly 3 in10 executives see blockchain regulations as the number one biggest barrier for the uptake of the technology’s full potential.
Also, about ¼ of respondents saw a lack of trust among users as the biggest barrier to overcome in blockchain adoption.
“Investment in the blockchain is finally getting some attention and investment. By 2022, investments are expected to reach $11.7 billion,” said Statista.
Hurdles facing Blockchain
CNBC said Deloitte Touche reported on 5 obstacles facing blockchain adoption
Deloitte says in a report: “Blockchain can be slow, only able to handle 3-7 transactions per second. In contrast, legacy systems are able to process tens of thousands of transactions per second.”
According to Deloitte, lack of interoperability “grants blockchain coders and developers freedom — and can give IT departments headaches as they discover that platforms can’t communicate without translation help.”
“On coding site GitHub, there was more than 6,500 active blockchain projects using a range of platforms with different coding languages, protocols, consensus mechanisms and privacy measures,” CNBC reported.
Reduced complexity, cost
As well as cost issues involved in both creating and maintaining a blockchain network, the Deloitte report says that complexity is another cause for concern.
“But a number of firms, including Amazon, IBM and Microsoft, are working on ways of improving the cost and complexity involved in creating blockchain networks by using cloud technology. Their work in the field is focused on creating what is known as blockchain-as-a-service, where effective “templates” are offered in order to make it easier for developers to set up and run blockchain networks,” says Deloitte.
There are other areas in blockchain where regulation is uncertain, such as smart contracts — self-executing contracts that run on blockchain networks like Ethereum. Deloitte highlights that existing regulations don’t cover smart contracts, which could inhibit investment in blockchain.