Blockchain has been a buzz word around for some time now. Just like any other new technology, it’s filled with lots of promises which it challenges to solve. In reality, is it capable of really solving it?
Are we just blinded by these promises or are we building on these promises?
We have heard a lot about what blockchain is, here is a perspective on what exactly blockchain is not and what those promises really mean.
A modern story about Trust
Trust is extremely vital for a society to function. As species, humans trust one another. A society can not function without trust, and the fact that we mostly don’t even think about it is a measure of how well trust works.
With the introduction of blockchain technology, loads of life-changing promises were born — Traceability, Data Security, Economic Safety & Global Stability, all catered through a central spirit — TRUST.
These promises forced people to expect blockchain to be some sort of a messiah or a savior — a means to a new beginning. Hoping, that in the new era, they will be able to control economic activity directly with one another by trusting a middleware, instead of trusting a middleman with great benefits ranging from cost-saving to privacy and security.
Blockchain is shifting the TRUST model from Middleman to a Middleware. Blockchain does not remove the additional parties involved in a transaction, it replaces them with a software middleware.
Blockchain can be used to share a ledger of transactions across a business network without control by any single entity. The distributed ledger makes it easier to create cost-efficient commercial relationships where virtually anything of value can be tracked and traded without requiring a central point of control.
Blockchain promises not to put privacy and control of data back in the hands of a single human. Trust and integrity will be established without reliance on a third-party middleman. It is a very important phenomenon with the potential to transform or disrupt industries and business models.
What Blockchain is not?
Like every other technology, blockchain has limitations and is not suited for application to all scenarios. It is not well suited for high performance (millisecond) transactions involving just one participant with no business network involved, or for replicated database replacement. It is inappropriate for low-value, high-volume transactions.
Scalability is a significant challenge in today’s world. Scalability issues are varied and different between public and private blockchains. In a public blockchain such as bitcoin, thousands of nodes store copies of the relevant content, forcing a limit on transaction volumes to preserve decentralization. In private blockchains, only nodes with a direct stake in the successful processing of the transactions are working. In addition, blockchains are not ideal for high-frequency trading because of delays introduced by the asynchronous, ad-hoc, peer-to-peer nature of the networked blockchain nodes.
There are also certain challenges with throughput capacity and storage limits related to permissions, as well as integration challenges when corporate legacy systems and ERP systems involved.
As blockchain is still developing, many of the initial disadvantages are being eliminated with further refinements in the ecosystem and decentralized stack.
With all this in place, Blockchain is just one chapter where cryptography and decentralization can be used to solve trust problems in a larger story where humans are still trying to find TRUST.