By Yuvrajsinh Vaghela
There is a noticeable difference when we talk about industries then and today. The world-changing technologies have changed their working pattern – the way they used to function earlier. One such emerging technology that by far gained tremendous popularity is blockchain.
Blockchain was introduced for the much-hyped digital currency – Bitcoin. But, when we look today, it too has evolved into something bigger, something significant.
So, how does it assist the industries? Let’s find out!
Blockchain As An Emerging Technology
Well, blockchain is being used quite potentially today by a lot of industries. According to Don & Alex Tapscott (authors of Blockchain Revolution, 2016), it is an incorruptible digital ledger of all economic transactions which can be programmed to record not only the financial transactions but virtually everything that has value.
However, some people in the blockchain industry state that this technology comes with certain limitations – not to mention legal entanglements that require a blockchain lawyer to sort out – and can even turn out to be inappropriate for a lot of digital interactions.
So, if you are using the blockchain technology for the first time, you ought to know these limitations that they have highlighted through various trial and error, research and development, success and failure. But, these limitations don’t make the technology less radical; they have just pointed some questions on its reliability and efficiency. So, are you ready to explore them?
Below-mentioned are the four major issues that the people using blockchain technology are going through.
1. Confidentiality Has Posed a Question Mark
As said earlier, blockchain is public. This means, every transaction that is recorded on the blockchain can be easily seen by everyone. Nevertheless, identifying you isn’t really that easy.
So, what is the concern?
Blockchain can pose a risk to your privacy as your information is available publicly. You wouldn’t like your personal details like finance or legal things to be exposed to the public, right?
Let’s understand this with an example. Imagine medical patient history and records are publicly available. Even though you may keep in a pseudonymous setting like blockchain, someone, somewhere will list the sensitive information of the medical patient publicly while someone else will invest a lot of time figuring out on how to get it.
The privacy issue is definitely a concern. Though, it should be noted that the private and permitted blockchains may not necessarily experience these privacy issues.
2. The Issue of Security Cannot Be Overlooked
Once the computers verify transactions on the blockchain, you are able to avail the security benefits. As the record of transactions is public, there is no chance of anyone making changes secretly. And, still, if anyone does that by chance, you will require the other nodes to agree with the same. Only then, it will get implemented in the ledger.
So, what is the issue? How is security a problem here?
Well, have you heard about 51 percent attack? The public blockchains are vulnerable to it.
A 51 percent attack is a situation that occurs when a hacker produces more than 50 percent of a blockchain’s computing power. This means, the hacker can revise the transaction, double-spend the coins and prevent the new transactions from confirming.
The smaller blockchains with fewer miners have a greater level of security issues as the amount of computing power needed to control 51 percent is lower as compared to bigger blockchains.
Not only this, but when we talk about the wider crypto community, there are a lot of security concerns that shouldn’t be sidetracked as well. In short, security is definitely a concern which you cannot ignore while indulging in the blockchain system.
3. Changing Regulations of Different Countries
Governments have lately begun to take an increased level of interest while observing the growth of market capitalization. So the regulatory issues can be in different forms pertaining to different places.
Like, for instance, some governments are tagging crypto currencies as illegal in their territories. Countries like Iran, Pakistan, Algeria, Morocco and many more have already banned Bitcoin. Reportedly, the Bitcoin owners have also been arrested in Bangladesh.
On the other hand, the absence of regulations creates issues like market manipulation.
So, even if governments think positive towards having a gradual and a reasonable approach to regulations, issues are bound to arise as blockchains are unalterable. Assume that a government comes up with some regulations that are met today, but what will happen in case of future regulations? No one will be able to update or amend these regulations.
4. Even the Law Is Experiencing a Glitch
Blockchain technology is experiencing many legal issues out of which a majority of them are unanswered. Some of these include:
Smart Contract Application
The presence of smart contracts has cut down on the expenses and increased security up to a great extent while undertaking complex legal processes. The main reason for this involves an absence of the middleman. But, considering that the smart contracts are purely based on computer codes, it is really difficult to ensure that they’ll be able to meet the contract guidelines in a true sense.
Additionally, how will the smart contract be enforceable in the court in case of a contract dispute? Well, the answer is not known! The least you can do is to come up with a clear dispute resolution process in your smart contracts.
Running in a decentralized environment, the nodes in blockchain are present all around the globe. So, how is it possible to establish the correct set of laws and rules? Each and every country has a different approach to title, ownership, contracts as well as liabilities.
Decentralized Autonomous Organizations (DAOs)
If there is a typical legal system where both the businesses and the individuals play their part, it means that they are going to have similar rights in many cases. So, how will this apply in case of DAOs?
Generally, these businesses work on smart contracts where they require almost no input from their users. Still, they are able to perform tasks like other traditional companies only with a difference that they are in the form of codes. So, who can be held responsible in case of conflicts? Who will resolve it? How and against what will the claim be made?
Walking Out from the Blockchain
We’ll again take an example to explain this. You are in the healthcare sector and have been using blockchain technology. Now suppose you decide to stop using the service that used to provide all the details to the blockchain, what will happen? Do you have a copy of that data on the ledger?
You need to be careful here by keeping the required provisions in place. According to these provisions, the vendor will provide you with a comprehensive record of the transactions that you have indulged in on the blockchain.
Is It Possible to Overcome These Issues
From the above, it is pretty clear that none of the issues have a straightforward answer. They can be resolved in the future with the increasing adoption rates, but all are merely assumptions.
Whatever the case may be, blockchain is definitely here to stay only with a drawback that it is impossible for anyone to predict the extent of the capacity that it can be used accurately.
For more on Blockchain, read the following posts: