The main disadvantage is the problem of scaling. Over time, the volume of information becomes so large that recording the next block takes too much time and effort.
We already see this in the Bitcoin network – the system is forced to set high fees in order to limit the number of transactions.
Part of the problem can be solved with the help of second-level blockchains – add-ons on top of networks designed solely for processing transactions. But there is no definitive answer to the question of scaling yet.
High power consumption.
Another problem of the blockchain system. The total electrical power of all mining pools in the world is equal to the needs of an average European country.
Many governments impose restrictions in the form of increased electricity tariffs, taxes and outright bans. The more popular blockchain becomes, the stronger this resistance will be.
To solve the problem, you will have to choose an alternative principle for the operation of networks.
For example, Ethereum is already abandoning the PoW algorithm in favor of PoS, which means the end of the mining of this cryptocurrency.
As the number of blockchains grows, interoperability issues arise. To link their logic, reward system and other features, “portals” and “tunnels” are created.
These network elements increase energy consumption and reduce resource efficiency. The answer can be provided by the universal blockchain protocol UniLayer Network, introduced in the spring of 2022. But this project could take years to complete.
Blockchain is also not a 100% security guarantee. Attackers can always trick you out of the key or convince you to transfer money to an anonymous wallet – it will be impossible to return them.
In addition, more and more fraudulent blockchain projects appear – their creators sell unsecured tokens, taking all the profits for themselves.
Experts say that blockchain transactions will form the basis of a new generation of the Internet – Web3. Ideally, this network should put the user at the forefront – they want to make it free and decentralized, with a minimum level of censorship, monopolies and government intervention. How realistic such a utopian idea is, only time will tell.
But now new types of blockchains are being prepared that will be used in various fields of human activity:
1.Industry – for the accelerated conclusion of contracts for production and control of the supply chain.
2. Cars — to create an electronic access key for both personal and carsharing cars.
3. Checking cash – future banknotes and coins will contain electronic keys that can be checked using a smartphone.
4. Emergency response services – the call will be processed by all network users, which will help to quickly locate a person and accept his application.
5. Land law — Ukraine, Sweden and the United Arab Emirates are developing their own blockchain-based cadastres.
6. Environmental initiatives – it is planned to create a system of rewards for garbage collection and plastic recycling.
7. Medicine – it is possible to create cloud-based patient records with a high level of protection. This will make it easier for doctors during the initial examination.
8. Ensuring the quality of food – the blockchain can serve as an analogue of the certification system, excluding counterfeiting.
The explanation of the blockchain for “dummies” is simple
It is an authentication system in which thousands and millions of users participate.
A large number of participants, modern encryption systems and independence from the decisions of specific people make it more advanced than existing alternatives.
Many experts believe that in the coming years, the blockchain will change our world in the same way that trains and steam engines once changed it. The new industrial revolution will make the digital economy faster, more efficient and more secure.
Researchers are confident that cryptocurrencies can be a potential tool for terrorists. Moreover, public interest in such technologies threatens the national security of the United States.
The fears of governments, and not only the American one, are based on the fact that bitcoins, and, accordingly, the blockchain has already been repeatedly used in illegal activities.
A striking example is the story of the existence of an anonymous electronic trading platform Silk Road, on the expanses of which drugs, weapons, stolen personal data and even human organs were sold.
Bitcoins were used to pay for such goods. It took the US government a lot of effort to find the founder of the site and suspend the activities of one of the largest suppliers of banned products.