- Blockchain has been hailed by its users as the Holy Grail with the founder of Binance referring to it as the Almighty.
- It is indisputable that blockchain has changed the landscape for various sectors such as music, art, education, commerce and finance.
- However, the technology is not foolproof and requires improvements in its energy consumption rates, scaling and governance issues.
- The lack of regulation and its inherent complexity are also problems that plague blockchain technology.
In every century, there is a technological advance that catapults humanity light years ahead of its time. The discovery of fire, the invention of the wheel, steam engines and, recently, the Internet, have improved the lives of mankind.
Just when we thought it couldn’t get any better, blockchain came onto the scene in 2008 changing the script for virtually every facet of human life.
Blockchain technology brought with it DApps, DeFi, DEX, and multiple use cases, but for all its innovation, the technology is far from perfect. Improvements in power consumption, scaling, and governance will be a welcome development for the technology.
After Satoshi Nakamoto invented the first blockchain in 2008, the technology took off like a rocket to the moon. In technical terms, a blockchain is a digital ledger of transactions that are held together in “blocks” that are linked to each other by cryptography.
Each block contains the cryptographic heart of the previous block and is practically unalterable except through the use of forks.
This technology is at the heart of cryptocurrencies, NFTs, decentralized finance, and decentralized exchanges, among others.
Blockchains have been implemented in the education system to keep immutable grade records and have been used in art and music. Through the benefits of blockchain, artists can earn money from their artwork and keep track of any future sales of their artwork.
Blockchain promises much more, including use for free and fair elections and even revolutionizing the global financial system as we know it.
The disadvantages of Blockchain
Perfection is nearly impossible to achieve and with over $ 2 trillion invested in the ecosystem built on blockchain, much remains to be desired. Critics of blockchain technology are quick to point out its high energy consumption rates. The high power consumption is the result of the immense amount of computing power that is used to protect blockchain networks. It alone uses more energy than Argentina and the use of fossil fuels raises environmental concerns.
The lack of regulation of sectors built on blockchain architecture is a breeding ground for scams, market manipulations, hacking, and Ponzi schemes. Cryptocurrency scams have already cost investors more than $ 20 billion since their inception.
Scaling is a fundamental problem in blockchain because as the network grows, it becomes difficult for the decentralized system to handle the number of transactions. This leads to slower transaction speeds and the paradox of stopping.
12 years after its launch, blockchain technology is still complex for the average person. It takes quite a bit of study to understand the inner workings of technology to fully appreciate it.
On the other side
- Critics of blockchain hold the conception that blockchain solutions are worse than the systems they are trying to replace.
- The volatility of cryptocurrencies and their increasing use for money laundering and illicit transactions puts a tent on technology
For blockchain to take on the role of almighty, it must be energy efficient. Blockchains should ditch the energy-intensive proof-of-work consensus model for the greener proof-of-stake consensus.
Technology must look inward to solve the scalability problem that has always been a thorn in its side.
A proper governance mechanism should be established to regulate the ecosystem despite its decentralized nature and the concept and interfaces should be made more user-friendly. IOTA, for example, is using an improved accounting system.
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