Blockchain Challenges
Blockchain has the potential to reduce the need for centralized authorities by creating digital "trust" between users who don't know each other beforehand.
Last updated
Blockchain has the potential to reduce the need for centralized authorities by creating digital "trust" between users who don't know each other beforehand.
Last updated
Blockchain's potential is hindered by practical issues like transaction speed. When a customer buys something with a Visa card, only Visa needs to keep a permanent record. But blockchain offers a "distributed ledger," meaning a permanent record shared widely.
The advantage of distributed ledger tech (DLT) is "inclusive accountability." Unlike Visa's transactions managed solely by Visa, blockchain lets anyone with the right tech and internet access ensure the system's integrity. However, decentralization comes with delays. Early blockchains like Bitcoin handle around 5 transactions per second, while Visa manages over 1,500. This challenge led developers to confront the classic blockchain scalability trilemma, where there's a trade-off between:
Even this trio doesn't encompass all the technical hurdles hindering the widespread adoption of DLT. These include economic constraints like steep transaction fees, deciding on finalization and consensus methods, and addressing the previously mentioned challenge of ensuring users experience functional confirmation times.
