It is impossible to deny the impact of blockchain technology on nowadays world. Since Satoshi’s whitepaper first came out, the term has been subject to heavy debate, polarizing opinions, and generating criticism amongst some sectors and experts. However, this hasn’t stopped a gigantic wave of people looking to buy Bitcoin with credit card.
While many people still think that blockchain is a synonym for digital money, this new technology can be used for a wide array of purposes, which includes improving the quality and integrity of notary services, public health, voting processes, identity storage, and more.
In spite of that, security is still a concern for those who think blockchain is only a promising-but-unfeasible type of solution. Indeed, it is hard to forget about events such as the DAO hack, or the damage caused in the 2014 “Mt Gox” hack.
Even though security parameters and double-checking audits became a standard throughout the crypto industry, many are still indecisive when it comes to betting on blockchain technology as an optimal solution for everyday issues.
What is a Blockchain? – Understanding the Concept
In layman’s terms, the concept of blockchain can be explained as a continuous chain or collection of recorded data, in which “chunks” of data (known as blocks) as linked with each other.
Each of these blocks is secured by strong cryptography-based technology, also being strongly resistant to data alterations. Once any type of data is recorded on a given block, the same block cannot be altered without affecting all subsequent blocks in the chain.
Even though the first theories about blockchain technology were written down in the early ’90s, the first blockchain to materialize in the real world was Bitcoin.
Created by an anonymous figure known as Satoshi Nakamoto, the Bitcoin network caused a massive upheaval in the financial system and opened the doors for many other cryptocurrencies in the subsequent years.
Use Cases for Blockchain Technology
There are many other use cases for blockchain technology besides cryptocurrency and digital money, including:
· Smart-contract technology
· Banking services
· Gaming industry
· Supply chain optimization
· Anti-counterfeiting measures
· Notary services optimization
· Public healthcare
· Voting processes
· Pension system optimization
· Identity storage and security
For instance, let us analyze the potential of smart contract technology as a manner to optimize the use of contracts of any type.
A smart contract is a blockchain-based contract that is programmed to execute/enforce its terms and clauses without the necessity for human interaction. Given that a smart contract works as an automated escrow, they do not need a third party to intermediate between entities involved in the contract.
Once the data is put into the blockchain, it cannot be lost or counterfeited. Plus, it can help to reduce the risk of non-fulfillment, consequently reducing friction between parties signing a contract. Such attributes are rising up the crypto prices because they’re actually useful.
The Cons of Blockchain Technology
It is plain to see the many advantages associated with blockchain technology, so why society and governments do not work together towards the mass adoption of blockchain-based solutions? Unfortunately, the answer could not be more complex.
In life, nothing is perfect, neither is blockchain. Security has been the most discussed issue when it comes to blockchain mass adoption in society, especially after famous hack attacks that occurred since the inception of Bitcoin.
In theory, the bigger a network is, the more resistant its blockchain tends to be. However, it also can lead to another issue, which is the impossibility or extreme difficulty to modify data added to the blockchain.
Indeed, blockchain is known for its stability, but it is not good in all cases. Typically, changing blockchain data/code would be virtually impossible in some cases, while in others it would require a hard fork, which is not easy as well.
Other common issues include predatory behavior from malicious entities via majority control (e.g., 51% attacks), exchange hacks, constant phishing, software flaws, and malware attacks.
It is undeniable that such issues restrict and limit the potential development of the crypto industry, which includes the mass adoption of blockchain-based solutions and cryptocurrencies.
Many players within the crypto industry are constantly developing solutions for each of these issues, at least to mitigate or reduce security risks in some cases while fully eliminating risk in other cases.
Security Threats or New Opportunities? – Final Thoughts
Blockchain technology is transitioning more and more to mainstream audiences, gaining momentum and finding its way amongst the public debate.
Currently, more and more players in the crypto industry are pursuing innovative ways to solve issues that haunt the existence of blockchain, which includes:
· Upgraded security mechanisms for mining pools
· Optimization of consensus mechanisms
· Focus on further decentralization (which hinders the action of malicious individuals or groups)
· Incentivizing double-checking on smart contracts
· Recurrent audits by trusted blockchain security firms
The advantages associated with blockchain technology outweigh the disadvantages on a large scale, which indicates that even with the existence of risk, its adoption is still something worth fighting for.