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Blockchain technology and its shortcomings

Most people understand that blockchains are a revolutionary technology. But they are not a magic solution to every technical problem. In fact, despite their benefits, blockchains also have to overcome some important limitations or problems. 

Here is a short list of some key difficulties facing the blockchain industry. 

1. Network Security

Blockchains are not completely immune to cyberattacks or attempts by malicious actors to take control of networks. In many ways, new blockchains are more vulnerable than older ones, as they either do not yet have a developed community or do not use a sufficiently robust consensus mechanism. Network security is essential for all blockchain networks.

2. Environmental Impact

Some types of blockchains (e.g., “Proof of Work,” like Bitcoin) are high energy consumers compared to other types like Solana or the Oasis Network who use Proof of Stake. Some critics claim this energy use has a bad effect on the environment, especially if it does not come from renewable sources.

3. Technical Complexity

Any new technology is usually somewhat complicated and difficult for mainstream audiences to understand. This usually intimidates both individuals trying to study this technology and those who want to implement it for their businesses. Blockchain advocates need to focus on simplifying the nature and utility of blockchains. 

4. Lack of Privacy

Even though public blockchains are advantageous for their transparency, their inherent lack of privacy can also be problematic. The fact that everyone can usually see everything anyone else is doing is not reassuring. Solutions for individual privacy like tools built on the Oasis Network are essential for the future of blockchain. 

5. The Blockchain Trilemma

One of the major problems, which has not yet been adequately solved, is called the “blockchain trilemma.” In short, this idea tries to show the struggle of how to simultaneously achieve high scalability, decentralization and security. For example, Bitcoin typically offers a high level of security and decentralization, but a low level of scalability. Other blockchains that boast of their scalability (or speed), but have problems with either decentralization or security.

The Future of Blockchain

Despite the several challenges explained here, blockchains are a very promising technology with a lot of potential. Recent years of an explosion of innovation worldwide have shown this potential. The probability that this technology will become an integral part of a digital future is very high, which is why overcoming these challenges is essential for the future of blockchain.