The 5 Most Important Issues to Solve for Making Blockchain the Future of Transactions CINDX Follow Jun 4, 2018 · 4 min read

There have been many debates over blockchain technology, the force behind the meteoric rise of Bitcoin and other cryptocurrencies. Experts have varying opinions about whether blockchain is the decade’s most significant technological breakthrough for the fintech industry. While there is no doubt that blockchain’s potential is enormous, there are still some noticeable issues when it comes to becoming the running force of finance and business transactions.

These issues are important because traditional currencies and their transaction methodologies have questionable security and privacy. When it comes to financial transactions that are robust in security and time-tested in efficiency, we currently have no better option than blockchain.

Although many people and financial authorities consider Bitcoin and other cryptocurrencies to be associated with criminal activity, the popularity of and demand for cryptocurrencies is a good indication that they aren’t going anywhere anytime soon.

As such, even if it seems improbable right now that cryptocurrencies will become a tool for mainstream transactions, the rapid growth of the crypto market means that nothing can be ruled out. Therefore, eliminating the technological issues in the systems behind cryptocurrency transactions is more a matter of need than a choice.

Here are some of the most notable issues which must be addressed if blockchain is to become the default platform for making financial transactions in the future:

1. The Use and Wastage of Enormous Energy by Blockchain

Blockchain is a monster when it comes to energy consumption. To understand this grave condition, just consider the fact that the Bitcoin PoW mechanism consumes an amount of electricity which can power a country the size of Switzerland for one year. As of the first week of December 2017, the energy consumption of Bitcoin mining reached 32.36 Terawatt-hours per year, which is higher than the estimated energy consumption of 159 individual countries cumulatively.

Blockchain must become many times better in regards to energy consumption if it would be the leader in the financial transaction domain.

2. Enormous Amounts of Data are Needed to Keep Records Intact on a Blockchain

While blockchain is a revered technology with immutable record-keeping capabilities, it uses a staggeringly high amount of data, as it needs multiple copies to be distributed across many nodes in order to preserve information and to prevent hacking.

The massive amounts of data needed for the storage, distribution, and exchange of information in blockchain is a problem, a problem that needs to be addressed right away if blockchain is to become the default method of managing financial transactions globally. The bulky nature of blockchain makes no sense in an increasingly compact digital landscape, and this must be taken seriously.

3. Blockchain Must Address the Disadvantages of Decentralization

While there is hardly any doubt that decentralization is blockchain’s cherished benchmark, the analysts who trust this have become increasingly vocal about the disadvantages of the very process of decentralization when it comes to verifying the records. In fact, Bitcoin and other cryptocurrencies that use blockchain depend on a ‘peer to peer’ methodology that does not require any centralized authority to govern transactions.

When it comes to auditing or tracing transactions, the blockchain makes it very hard for anyone (including governmental and legal authorities) to have access to important pieces of transaction data. This point is important in terms of law and governance, and if blockchain will thrive, it must be able to provide the benefits of centralization as and when required.

4. Slow and Steady Cannot Win the Race

Forget the ‘Hare and Tortoise’ story. The harsh truth about blockchain is that it is pretty slow and inefficient. The technology is such that when it comes to transactions of Bitcoin, a blockchain allows only seven transactions to go through in one second. While this does not seem to be a problem at first sight, when you take into consideration the entire crypto economy, you’ll realize that the process is ‘too slow’ due to blockchain’s time-consuming nature of operations.

It is a fact that millions of miners are ready to churn out cryptocurrency burning enormous amounts of electricity costing millions of dollars, but blockchain can only allow these ‘seven transactions per second’ indifferent of how much energy is being guzzled by the miners.

About CINDX

CCINDX is an investment platform that allows individuals to combine several crypto exchange accounts into one trading terminal, and gives them the option to connect to the best managers without having to transfer their funds. Moreover, implementation of blockchain-based transactions will allow the trading history to be saved, and a rating system will be used to differentiate the successful managers from the less successful ones.

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