Exploring the Limitations of Blockchain Technology

Blockchain technology is a breakthrough for an array of sectors ranging from FinTech to real estate, to law. It is a decentralized and distributed technology that is efficiently used to record transactions. It is a much secure and transparent channel of transaction that stores information in different blocks. These blocks are connected with one another in the form of chains and cannot be altered once placed. Its ability to work in a distributed environment makes it an important innovation in the world of numbers.??

The fact that blockchain is maintained by a network of computers, or nodes, rather than a single centralized authority, which makes it resilient to tampering and hacking, is one of its main features. Because of this, blockchain is perfect for use in businesses where security and transparency are essential, like finance or supply chain management.

However, like every technology comes with its own set of features and limitations, there are certain potential risks and challenges that Blockchain technology entails. Let us look at the main limitations of using blockchain technology:

1. Security risk

Although blockchain technology is considerably reliable and secure, there are some loopholes that need to be taken into account. In the case of 51% attack on the network, the hacker can take over the entire network and manipulate it as per their wish. They can even change the transaction process and restrict other users from creating blocks. This requires great expertise as it can lead to huge financial losses and a bad reputation for the business.?

2. Scalability issue

Scalability is a challenge in blockchain technology as when mass integration takes place, it slows down the overall process. In this case, as and when the users increase, the system starts taking longer and restricting transactions as a result. This also lowers the efficiency of using blockchain technology for bulk transactions.

3. ?Lack of privacy

Since information stored in the blockchain can be accessed freely by any individual connected to the network, there is an evident lack of privacy. Since most businesses include sensitive information about their customers, use of blockchain in that case would compromise the privacy and security of data and hence act against the ethical standards of the business.?

4. Lack of regulation

There are no standard regulations implemented so far for blockchain technology , hence businesses are following norms as per their suitability. This creates a situation where no clarity exists in terms of standard practices and there are no regulations overall.?

5. Slow processing speed

Another challenge with using blockchain technology is that it is slow and cumbersome. The process takes longer than expected time and there is an immediate need to address this issue. With fast evolving technology, time-consuming practices will soon become obsolete.?

Other than the above mentioned points, there are many other risks and challenges that blockchain technology entails. Nonetheless, blockchain has been one of the buzzwords and most trending technologies in the past couple of years and continues to gain momentum because of the several advantages that it offers to Fintech, law, and other sectors.?