The blockchain is regarded as a technology that will revolutionize the finance sector. Slow transaction speeds and a lack of standardization are posing as threats to growth.
In the study conducted, Deloitte highlighted obstacles that the technology must overcome to receive full adoption.
The blockchain is like an accounting ledger, except it records transactions across a large network and is decentralized, which means that a central authority isn’t required to manage it.
Advocates of the technology say that’s a colossal advantage when it comes to tracking financial transactions and other data.
But there’s an issue, Deloitte says:
“Blockchain can be slow. In contrast to some legacy transaction processing systems able to process tens of thousands of transactions per second, the Bitcoin blockchain can handle only three to seven transactions per second; the corresponding figure for Ethereum blockchain is as low as 15 transactions per second. Because of its relatively poor performance, many observers do not consider blockchain technology to be viable for large-scale applications.”
The report added:
“The evolution of consensus mechanisms is improving blockchain speed significantly — good news for applications in trade finance, supply chain traceability, auto leasing, marine insurance, health care, and insurance.’’
With more and more players in an ever-expanding industry like blockchain, a few are stressing that with this number of different networks, no standard exists to enable them interacting with each other.
The report revealed that on GitHub, there are more than 6,500 active blockchain projects which are using a lot of platforms with different coding languages, protocols, consensus mechanisms and privacy measures.
The report further revealed:
“Standardization could help enterprises collaborate on application development, validate proofs of concept, and share blockchain solutions as well as making it easier to integrate with existing systems. Help is on the way as a growing number of industry participants work to enable cross-blockchain transactions, interconnectivity, and standardization.”
Reduced complexity, cost
The most popularly used criticism of bitcoin’s blockchain network is that it almost completely relies on intensive computing power, meaning a lot of electricity, in order for it to work.
Miners are using computer rings with a lot of servers connected in order to keep the network working, which is very costly.
Elite Fixtures, a study conducted which revealed that it costs more than $26,000 just to mine one bitcoin in Sout Korea, which is one of the best markets for crypto trading in the world.
There are parts of blockchain that almost aren’t regulated at all. Take smart contacts– self-executing programs that operate on networks like Ethereum. These contracts contain sets of pre-determined rules and conditions under which it operates, making sure that the buyer and the seller are in agreement, this way. When those rules and conditions have been met, the contract is automatically enforced.
However, Deloitte highlights that current regulations don’t cover smart contracts, which could inhibit investment in the blockchain.
The report says:
“As a technology that facilitates transactions across a network, the value of a blockchain network increases with the number of users. That’s one reason why the growth of blockchain consortia is a bullish sign.”
In a study conducted this year in March, the group put the number of blockchain oriented consortia currently in existence at 61, which proved to have been more than 28 consortia that were around in the year prior.
The report adds:
“Not all consortia are building applications, and not all are equally effective. But growing participation by enterprises, technology providers, regulators, and governments is a vector of progress in the development of blockchain that will help increase adoption of the technology.”
The operational gap
The obvious issue with blockchain technology execution is the operational gap. It has been noted on different events how the blockchain isn’t prepared to deal with the huge measure of operations per second required for real-time bidding(RTB). The original technology was intended to permit 10 transactions for each second, while with RTB the volume could achieve 3 million transactions.