Blockchain becomes a pervasive topic when bitcoin price skyrockets to five-digit number from few hundred dollars in recent years. As the carrier for various cryptocurrencies, blockchain is challenging traditional organizations such as banks by sharing information irrefutably. However, despite its advantages, there are still many potential concerns regarding blockchain. Doubts about blockchain’s efficiency, safety and eternity have been raised when mining competition becomes more aggressive and more powerful computational hardware debuts.
Firstly, blockchain is not as efficient as people believe. Incentive by the high-value coins, many people, who are called miners as well, are solving puzzles simultaneously. However, due to the provision of blockchain’s ledger, people are dedicating to an identical question. Therefore, the work done, and power spent by the rest of mining machines would be dissipated when the only winner cracks the problem. In energy perspective, people are generating electricity in cost of devastating environment. Therefore, if the wasted electrical energy spent on the rest of machines could have been saved, global warming effect would be alleviated. On the other hand, the disposal of work is also a waste in computing memory. Each year, millions of dollars have been spent in cloud computation because of the insufficiency of local memory space. The wasted memory could have been spent on these needed calculations to save money and time.
In addition, accompanied with blockchain’s growth, the history data shared in public has been increasing as well. The Bitcoin record size has surged to 100 GB so far and the Ethereum network has accumulated over 200 GB of data in its first 30 months of use (Brett, 2018). Therefore, unnecessary storage memory is taken when data are duplicated among various machines. In analogy, data mining would become more exhausting in the future as data size would surpass few TB and wasted storage memory would soar simultaneously.
Secondly, the immutable feature of blockchain has been challenged by the appearance of more powerful machines and it might rise safety concerns. Quantum computer, recently announced by Google, is able to do calculations in 200 seconds which take the best classical supercomputer 10,000 years to finish (Frank Arute, Kunal Arya, 2019). Though blockchain has been used to record transaction and data safely since 2008, with quantum computing machines, however, previous designed blocks could be “modified” by recalculating the entire blockchain. Therefore, updated ledgers would be verified when the latest version is broadcasted, and previous transactions might be altered sequentially, which would cause chaos among current market.
On the other hand, centralized hashing power can harm blockchain’s safety and stability as well. So long as over 50 percent of mining power in the market is held by an individual, company or country, the domination in data mining would occur, which could unbalance cryptocurrency’s distribution and price. A cryptocurrency’s indestructability would easily collapse when it is banned in the dominated area as it cannot be spent, communicated or even owned by the residents. Moreover, a lie would become a truth when it is verified by more than half of computers serving as nodes in the network. This so-called ‘51% attach’ hypothesis could halt payments and tamper with transactions, making double-spent coins possible and damage cryptocurrency market. (Smith, 2018)
Besides, blockchain’s safety is threatened by its innate public-key cryptosystem. In general speaking, a user will have a pair of private and public keys. The public key is used for encryption while the private key is used for individual decryption, which makes the ciphertext incomprehensible to others. Therefore, private key becomes the target for the attackers. Many people will store their private keys in a computer disconnected to the internet while some will memorize them mechanically. However, the private key still has the chance to get stolen due to internet insecurity and hackers’ attack. Thereafter, personal cryptocurrency bank can be accessed by other people and transaction could be made without owner’s authorization.
Thirdly, some blockchains are sluggish and might even disappear ultimately. In Bitcoin example, only over 500 transactions will be wrapped in a block in each 10 minutes. In contrast, Visa will take millions of transactions per second. Therefore, Bitcoin is difficult to penetrate daily trading due to its niche transaction characteristic. Meanwhile, since award for miner is halved in every 4 years, the amount of coins excavated would decease and the total amount of coins in market would saturate. In mathematical perspective, if Bitcoin’s price cannot get doubled in every 4 years, the revenue generated by miners would be lessened and mining could become less attractive. In the worst case, when mining revenue and opportunity cost break even, there would be nobody willing to encapsulate the blocks and this blockchain would stop running. Hence, payments could not be made anymore and all cryptocurrency in this block would be worthless.
Last but not least, blockchain is affecting social architecture as well. On the one hand, cryptocurrencies are always tempting people to make huge profit by luck. I once heard from a taxi driver that he lost most of his savings in Bitcoin in 2018. Since blockchain is an in-depth technology, most people are simply gambling on cryptocurrency without realizing its market value and risks, which can mislead people about blockchain investment and lose their wealth. Besides, blockchain is disrupting many systems inveterate in different authoritative organizations over periods such as banks and governments. Many people regard this innovation detrimental as it will take their jobs and some governors are trying to smother blockchain technology to stabilize the economy and society. Therefore, blockchain development will confront a lot of resistance in the long run.
In conclusion, as an innovative technology, blockchain can bring fundamental benefits to our society. It makes data more secure and wipe off tedious and expensive intermediary procedures among traditional transactions. However, blockchain technology is still in its infant stage with only 12-year history and worries have appeared together with the fast technology development over past decade. Hence, humans need to be more prudent and use it wisely to create well-beings to the world.
1. Brett, C. (2018, October 15). Blockchain disadvantages: 10 possible reasons not to enthuse. Retrieved from enterprisetimes: https://www.enterprisetimes.co.uk/2018/10/15/blockchain-disadvantages-10-possible-reasons-not-to-enthuse/
2. Frank Arute, Kunal Arya. (2019). Quantum supremacy using a programmable superconducting processor.
3. Smith, T. L. (2018, March 24). The 6 Limitations of Blockchain Technology. Retrieved from medium.com: https://medium.com/everything-blockchain/the-6-limitations-of-blockchain-technology-2d1b686c0293