Blockchain technology has the potential to revolutionize many industries, particularly financial industry. As a decentralized ledger, it records every transaction and stores information in a global network, providing a more simplified business process and safety records of business documents. However, aside from the benefits, blockchain also has several challenges that companies and startups need to address to experience the most out of the technology.
More products and services are being utilized based on blockchain transactions, but there are currently no regulations on how the transactions should be written. And this is where the problem comes in. Although blockchain has promised transparency as one of its benefits, but there is no guarantee that each person involved in the network is protected if a problem occurs in the future. To overcome this challenge, government and highly regulated industries may need to develop regulations for blockchain.
Privacy and Security
With all information stored in a global network, blockchain technology should be able to simplify the business collaboration as the original design is made to be publicly visible. This creates a number of concerns because companies and government need to be able to restrict access to their data. In other words, blockchain technology cannot work with sensitive data.
However, you can actually customize a blockchain so that people are only able to access parts of the blockchain that are really relevant to their tasks. Although it will take quite some time to plan, it makes the adoption of blockchain technology more likely.
According to Nasdaq.com, the blockchain technology requires the proof-of-work mechanism to validate transactions. It requires the computation of complex mathematical problems to verify transactions, process them, and secure the network. In order to perform them all, the blockchain technology requires a large amount of energy so that the computers have all the power they need to solve the problems. Moreover, it also needs an additional energy to cool down the computers.
One of the most popular long-term benefits of blockchain technology is the cost reduction. Well, it’s true. But to initially put it in place, you’ll need a lot of money. In order to adopt the blockchain technology, you need software that must be developed for the specific firm, which is quite expensive to purchase. Not to mention the specialized hardware to use with the software.
Lack of Adequate Skill Sets
Besides software and hardware, you must also find qualified personnel to handle the blockchain technology. As you know, the blockchain technology is relatively new and is growing in such a rapid pace. Currently, there are not many people who have needed skill sets to take care of such technology. On the other hand, the demand for these qualified personnels is huge. So, if you really want to hire the right people to handle the blockchain technology, you must be willing to pay large salaries to them.
Like any technology innovations, blockchain will continue to evolve. Yes, there might be some challenges, but those are not roadblocks. Regulations and standards will be enacted. Before you know it, you will consider to adopting the blockchain technology for your business, too.