Challenges ahead of Blockchain and cryptocurrencies


Friday, November 7th, 2008. This happened on The Mail Archive.

- You will not find a solution to political problems in cryptography.
- Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks [...], but pure P2P networks [...] seem to be holding their own.  
Signed, Satoshi Nakamoto.

This is the author of the Bitcoin’s whitepaper, made public on November 1st, 2008. Almost a decade later, Satoshi Nakamoto vanished, but the challenges ahead of the crypto-world are here to stand. Let’s find out why.

Crypto, Challenges

Perception challenges

Just like every emerging technology, the first obstacle is knowledge and understanding. With the Blockchain, a much more complex concept than many, it’s going to be a while before wide appreciation is reached.

Technical challenges

Another challenge is purely technical. The Blockchain is fairly young and requires time to mature. There are currently issues with transaction speed, verification, and data management. And despite a promise of high security, there are still security and privacy challenges.

If Blockchain is going to coexist with other technologies in organizations, a lot of innovation will need to emerge to make that happen. Integration will also require consensus for distributed ledgers to talk to each other. And that implies developing standards, uniform engineering and technical criteria, methods, processes, and practices. G initial standardization work is now underway, particularly by the International Organization for Standardization.

There is also the large energy required for transactions, specifically in a Bitcoin-driven Blockchain. Every transaction requires participating nodes to solve complex mathematical problems. And that comes with an energy cost.

Furthermore, technically speaking, the Blockchain is complex to develop and use. Specialized skills are needed, for example, to program on Ethereum or Slock.it. Even managing a smartphone wallet with Bitcoin requires some technical savvy.

Another challenge is regulatory acceptance, and resistance to change. The fact is, from a financial industry standpoint, it’s clear that both digital currencies in general, and the Blockchain in particular, have the potential to seriously upset the status quo. Without the need for banks, exchanging cryptocurrencies peer-2-peer is a notable disruption. Financial organizations may need to accept something that ultimately reduces their value. Adopting digital currencies means changing regulations, laws, policies, treaties, and agreements. And that needs to occur between organizations, and at an international scale.

Cultural challenges

Finally, culture will struggle with adopting the radical nature of the disruption brought about by Blockchain. There may be a reluctance to accept the degree of change needed by many organizations. Think of it as how the Internet faced reluctance and skepticism in the 1990s. There are a lot of reasons to believe the Blockchain will have a difficult time settling. Nevertheless, there are even more reasons it might be bigger than the Internet itself!

One thing remains obvious, it’s a new era. And we are lucky to embark on the journey.

I leave you with this interview, by Entrepreneur, when Bitcoin was trading at 240$.

The future of Crypto, speculated by entrepreneurs. Source: Entrepreneur

By: Mehdi Mezni


 

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