Blockchain technology is creating much interest in a lot of industry domains in both India and abroad. The potential of the blockchain has been recognised in India especially for applications related to improving governance.
Transparency in governance is an important dream of every citizen of every country. But the actual implementation varies in various degrees across the countries. Combining the unique characteristics of blockchain technology which provides a quite good platform for auditability is the solution to improve transparency in various domains of governance.
Bitcoin was the first cryptocurrency and it revolutionised the banking sector in certain parts of the world. Though its adaptation is a bit slow in India till now, the movement of the banking sector in that direction will be necessary in the near future. The anonymity provided by the blockchain serves as an excellent reason for its adaptation.
Though bitcoin has numerous advantages, there are also challenges before we can hope for large scale adoption of it by the industry. The following are well known:
- The most important challenge that needs to be addressed is the increase in the processing speeds – as more users join, the network tends to slow down resulting in a huge transaction fee.
- The second most important problem is the lack of standardization – standards are required for any technology to have a scalable adoption across the globe. All networks which will be using the technology need to speak the same language in order to be understood and to complete the transaction. All new technologies suffer from this at the beginning till the standards slowly build up from experience.
- Privacy and security are the next challenges as far as the blockchain is concerned. The blockchain is an open access platform with public information open to all the servers. This is the reason for its most enviable characteristic – transparency. But at the same time, this also poses threat to privacy of the public using it.
In addition, the model of the blockchain includes validation of the transaction by the majority of the miners. If the miners are able to create a sub-network that they can control exclusively, it starts posing a threat to the other miners. The number of miners in the network is the key. If the blockchain network is large enough to ignore this, the threat is hidden and can become a large threat any time in the future.
- Lack of regulation is the next one that might create a bigger challenge in the future. Scams and market manipulation which might lead to a crash of world economy is not impossible. Hence, Bitcoin has been receiving hostile encounters around the world. Some of the countries have actually banned the bitcoin cryptocurrency. Some are providing measures to regulate the Blockchain networks, but the success of the regulations is anybody’s guess.
With news of cryptocurrency being closely associated with some of the cybercrimes like selling drugs, weapons and other banned items, countries have started questioning the wisdom of utilising the technology for legal transactions as well. Being anonymous is quite convenient for illegal transactions, right?
Apart from the above major challenges, some of the challenges on the user end like cost, power consumption, speed of the network also is considerable. Overcoming all these challenges are the opportunities that can be grabbed by technologists to make bitcoin and blockchain a more acceptable technology for all. The power consumption and speed can be worked on using improved technology and these are simply technical problems that only need technology to solve the issues. But the other ones involve ethics and professionalism which might not be easily solvable.
The author is Ramalatha Marimuthu, IEEE Senior Member.