BACKGROUND
Major Challenges In The Blockchain Industry
The present age is filled with science and technology. Today’s modern civilization is the gift of seamless and robust technological development. Therefore, we are going through an innovative flow of amazing technology that spreads among various sectors, like manufacturing, retail, and financial services (Chang et al., 2019; Hou et al., 2020). Blockchain is a suitable technology for various sectors to maintain a distributed ledger of transactions, properties, etc. Blockchain alters the way of doing business (Wagire et al., 2019) and has the potential of generating new business models (Gökalp et al., 2018). This technology was invented by Satoshi Nakamoto in 2008 as a transaction ledger for the cryptocurrency bitcoin, which could solve the problem of sharing transaction information among involved parties without any central control. Blockchain is a distributed database that records the transactions between parties efficiently and in a provable and enduring way (Iansiti et al., 2017). Many organizations are enhancing their interest in blockchain technology because of the significant advantages for businesses. In addition to confirming data integrity, blockchain allows increases in direct transactions between suppliers and customers, along with keeping correct records of asset movement (Lacity, 2018). Blockchain also plays a vital role in enhancing the traceability of transactions, increasing cost-effectiveness, and improving the performance of banks and other financial institutions (Hassani et al., 2018; Frizzo-Barker et al., 2019; Palmie et al, 2020). Blockchain is also being adopted in real estate and public registries to take advantage of the immutability possible with distributed ledger systems (Konashevych, 2020). Likewise, educational institutions have begun to adopt blockchain technology (Bhaskar et al., 2020). Though blockchain has the ability to improve performance in the financial sector, it faces several challenges such as scalability, security, privacy leakage, energy consumption, laws and regulations, cybercrime, and so on (Chang et al., 2020). Firms also face governance, legacy, and coordination issues at the time of adopting blockchain technology (Upadhyay, 2020). Blockchain adoption in the health sector deals with some additional challenges, such as large data sharing in hospitals, data security and management, handling of socio-economic data, and so on (Attaran, 2020). Although blockchain solves some issues involved with integrating IoT-based precision agricultural systems, it still poses challenges to security and privacy (Torky & Hassanein, 2020; Ferrag et al., 2020). Blockchain has the potential to decentralize educational documents and materials which encourages lifelong learning. Yet even still, privacy, security, and proper standardising for implementation are significant challenges for educational institutions (Bhaskar et al., 2020).
Blockchain Trilema
Blockchain technology holds a lot of promise for improving the security and accessibility of many products and services across various industries. The blockchain is touted as the most significant technological innovation that has already captivated a good chunk of major industries. There has been exponential growth in the adoption of blockchain technology in the past few years. But for all its potential benefits, there are still several problems with blockchain that many developers are working to solve. Termed by Vitalik Buterin, The Blockchain Trilemma addresses the challenges developers face in creating a blockchain that is scalable, decentralized and secure — without compromising on any facet. Blockchains are often forced to make trade-offs that prevent them from achieving all 3 aspects:
Decentralized: creating a blockchain system that does not rely on a central point of control. Decentralization is a core component of blockchain. Decentralized systems matter because they empower permissionless ownership where anyone can use and build on the platform. Decisions are made by consensus, which means transactions are approved by a group of nodes as opposed to an individual node.
Scalable: the ability of a blockchain system to handle an increasingly growing amount of transactions. Scalability is important for mass adoption. It’s the question of how much a blockchain system can sustain, and whether the system can operate smoothly as demand increases.
Secure: the ability of the blockchain system to operate as expected, defend itself from attacks, bugs, and other unforeseen issues. While scalability focuses on the upside, security prevents the downside — something just as important, but all too often forgotten.
For some in the industry, achieving all three aspects is an impossible feat that will never be done, at least in the near future. However, there are still ambitious developers who believe that blockchain networks can have all three and then some.
Security Issues
Despite the energy savings, the switch to proof-of-stake isn’t universally supported in the Ethereum community with some expressing security concerns. The extra information that proof-of-stake provides validators may reduce its security to some degree and lead Ethereum to become less decentralized.
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