As a technology, blockchain is unarguably ground breaking and is going to change the game in almost every industry in the future. Unfortunately, blockchain doesn’t act as a jack-of-all-trades. The very idiosyncrasies that make it such an awesome solution for some applications, make it an awful one for others.
Blockchain as a platform holds four different positive features:
Security – It’s almost impossible to hack.
History – The records it stores cannot be modified.
Transparency – It lets you have the entire transaction history of a record.
Speed/Cost – It doesn’t necessarily need a central governing body.
In areas, such as medical records management, voting, and legal transactions, just to name but a few, these key features will offer ground breaking solutions.
However, there’s a great “BUT.” The above instances have two key main characteristics. Firstly, their transaction rate is very low. Most people don’t go to hospital that regularly, we do not vote every year, and you don’t get divorced or buy a house every month. Plus, they are all in industries that already have a lot of money spent in them.
The ‘mining’ necessary to confirm the accuracy of a transaction on a public blockchain network can take as long as 20 minutes.
Picture this: if Spotify was built on Blockchain. Every artist will get a small commission every time a song is played. This can represent millions of records a day. Then you’d need more people mining the data than you have listening to the music.
For any software or application that needs a high frequency of transactions, blockchain, simply isn’t workable yet. The technology is going from good to better.
The same issue is applicable to currency, which is ironic since blockchain came out as the machine running Bitcoin. Seen as a precious tradeable commodity like a diamond, Bitcoin does great. Now, try to purchase something at a restaurant with it, and it becomes a nightmare. This also rules out media streaming, social media platforms, phone records, inventory management for fast moving consumer goods, and so on.
In the second hand, blockchain makes some other transactions faster and cheaper. Buying a house for instance can take up to six weeks of legal wrangling quite easily. Using blockchain makes this possible in a single day. Your overall expenses can come down to $100 instead of $10,000 in legal fees and that makes total sense.
Building a smart contract system using blockchain would on average cost more than $1million. For an industry that generates millions of dollars, that’s a good investment. It stops being quite so interesting to companies that have lower turnovers though.
There are over 500,000 small enterprises trading in Australia who employ between one and 20 workers. That accounts for over 95% of the whole workforce. It’s difficult to think of a high percentage of those enterprises willing to spend a hundreds of thousands of dollars on a website using a blockchain backend.
There is one last downside to blockchain. That is lack of control. As a decentralised database and network, there’s no controlling institution. To some extent, this is a good, but the disadvantage of having a lack of control, is, actually, a lack of control.
See, there are two different versions of Bitcoin and Ethereum. The two greatest crypto in the world have now become four. Just because the network argued. The people who manage the records for both crypto, to an extent, ceased to find common ground. Half thought one decision was the way to go, half thought another. The outcome was a fork in technology. Bitcoin gave birth to Bitcoin Cash and Ethereum gave birth to Ethereum Classic.
Plenty of developers agreed to change the code source, and that was that. Actually, there is no way to stop this happening on a public network. The network decides the fate. It’s a family, and no family always get along. The bigger the family, the higher chance for discord.
So What Now?
So blockchain is the safest technology in existence, but it isn’t the only secure platform. Some of the inconveniences outlined make it less than interesting for certain applications.
For our part, at Alacrity, we’re believers in the blockchain. We invest and build on it, developing projects in which there is a clear use of technology combined with a valuable benefit that will benefit both users and customers.
Our new blockchain allows us to build systems and technologies that have never been built before and have the capacity to disrupt long-established monopolies that have had their own way for far too long.-->