Blockchain is one of the world’s most rapidly evolving technologies. Blockchain faces several obstacles like any other technology, so it has been slow to catch on in many industries. Several business leaders and organizations are ready to adopt this technology. Still, a few issues must be addressed because they blame the technology’s slow adoption.
Challenges for Blockchain Adoption
Blockchain is frequently touted as one of the technologies that will revolutionize various industries, including finance, healthcare, and so on. However, several issues threaten its expansion, such as a lack of standardization. Here are some of the significant problems that Enterprise Blockchain Consulting and its solutions face. To begin with, the blockchain has a cost to the environment.
Blockchain relies on encryption to provide security and establish consensus over a given network, which is typically distributed. As a result, several blockchain algorithms must be run to prove that a specific user. These complicated algorithms necessitate a lot of computing power and thus come at a high price. For example, in 2019, one of the most common blockchain examples, Bitcoins, was claimed to have consumed massive amounts of power required to run the energy, proving to have cost the management a significant amount of resources.
Other factors, such as security requirements, drive up the cost of maintaining and operating technology, which most businesses cannot afford. Because of the algorithm used to create blockchains, it has been discovered that they consume a significant amount of energy. Because of the algorithm used in its development, blockchain adoption consumes a lot of energy.
Solution to the Power Consumption Problem
In the blockchain, two applications can provide a solution for reducing power consumption. This includes abandoning proof-of-work validation methods in favor of proof-of-stake and proof-of-authority techniques. This method uses less energy than proof of work validation, which is commonly used in blockchain algorithm development. The use of these techniques in blockchain applications reduces the amount of energy used by the blockchain.
The Energy Web Foundation, for example, is working on a new design of proof-of-authority methods that is energy-intensive because it advocates for the adoption of distributed renewable energy sources. Interoperability is another issue with blockchain technology. Many players are entering ever-expanding industries, raising concerns that one of the challenges many networks face is the lack of standards that allow players to interact. Interoperability is a term that has been coined to describe standardization. Because of the lack of interoperability, blockchain coders and developers will have more freedom.
On the other hand, put the Information Technology departments through hell because they’ll discover that some platforms can’t communicate because they need translation assistance. According to the report, some platforms, such as Github, have approximately 6500 active blockchain projects that fully utilize or are developed using various protocols, coding languages, and privacy mechanisms. It’s impossible to create just one blockchain because so many different industries have different use cases.
Differences in Blockchain Requirements
A supply chain blockchain, for example, requires more decentralization and fewer TPS, whereas an IoT application development requires high TPS throughputs and lower fees. This makes it difficult for blockchains to communicate with one another because they are so isolated and disconnected. This problem, however, can be solved by utilizing cross-chain technologies such as NeoX to help connect the various blockchains. Sidechains, such as ICON, have been allowed to run in parallel with blockchains, thanks to a two-way peg that allows assets to be exchanged between the two chains. The side chain can quickly validate transactions in the main chain when both chains use the exact consensus protocol mechanism.
Ripple’s escrows methodology is another interoperability solution (XRP). The company uses Interledger protocols to connect the various ledgers and allow users to transfer currencies using third-party connectors freely. This protocol incorporates the cryptographic algorithm and can generate fund custody for the different ledger systems involved using third-party connectors or validators. After they have reached an agreement, both parties confirm the cross-ledger transactions. For cross-chain communication, Raiden and Bitcoin’s lightning network can be used. These Ethereum networks use a technology called harsh locking, which allows for cross-chain payments. An off-chain payment network is established to enable value transfer between the different blockchains that make up the lightning network.
The Raiden network assists Ethereum in transitioning from its current model, in which various transactions pass through the blockchain, to a model in which users transfer tokens. This is accomplished by exchanging data off-chain without involving the Ethereum network’s global consensus protocol while maintaining network security. WAN, AION, and ICON are among the projects collaborating to enable blockchain communication. They’ve joined forces to form BIA to address the issue of blockchain isolation.
Privacy on the Public Blockchain
Another issue in the blockchain environment is privacy. In a public blockchain environment, transactions and network ledgers are open to the public for transparency and easy tracking. The lack of privacy in such transactions contributes significantly to issues such as confidential corporate information. Coin Join, Zero-knowledge proof, and Ring signature are some of the protocols developed to provide an alternative to Bitcoin’s anonymity.
Businesses require privacy in their transactions, but blockchain does not address this, leading to many companies scrambling to find a solution. For instance, EY and Microsoft launched the Baseline protocol in 2020 to help businesses operate on the Ethereum blockchain using Zero proof, distributed identity, and off-chain storage to improve the use of common standards in transaction processing. This feature could allow businesses to avoid storing personal and sensitive data on the blockchain by giving them complete control over their processes.
Monero employs the ring signature as a privacy protocol. When using this protocol, once a sender initiates a transaction, it is joined to other users’ transactions to form a ring. The transactions are then masked to make them indistinguishable from one another, making it more difficult for criminals to track down a specific transaction. Monero also employs Stealth Address technology to generate a one-time address for each ring transaction. Zcash uses a zero-knowledge proof methodology to enable the processing of anonymous transactions. Except for users with private keys in the smart contract, the technology can hide transaction information. So that the sender, receiver, and amounts are not visible in the system.
Dash uses the Coin Join technology, which combines multiple payments from multiple spenders into a single transaction. It isn’t easy to trace a single transaction due to the mixing of transactions. The adoption and success of blockchain technology on a global scale necessitates addressing the platform’s current challenges. This includes environmental issues such as energy consumption, interoperability, and privacy. Because proof of stake and authority are less energy-intensive, they can be used instead of evidence of work validation to save energy.
Interoperability issues can be addressed by using a cross-chain to improve the connection between different blockchains. On the other hand, privacy can be achieved through Coin Join, Zero-knowledge proof, and Ring signature, which renders transactions untraceable in the system except for those with the opening key. These obstacles can thus be more easily overcome by implementing new technological advancements to boost the adoption and growth of Blockchain technology around the world.