Blockchain is a tricky subject to delve into, because opinions on it are typically split between two extremes. On one hand, there is the undeniable fact that it has the potential to reinvent different aspects of business processes. Yet, headlines frequently pop up which indicate that it still has many vulnerabilities.
The headlines with a negative slant work strongly against blockchain technology, and serves as one of the reasons why crypto coins have yet to experience mass adoption. The hype is strong, yet true understanding of it is limited.
Liquidity in crypto markets proves to be a bit of a shaky ground on a couple of fronts. For starters, holders aren't actually able to make purchases using their cryptocurrencies in most marketplaces. Then there is also the general lack of liquidity which makes it difficult for holders to exit at the right price, because they may be choosing to hold onto their coins for the value to rise, thereby being unwilling to put it back on the market. They subsequently end up flooding the market, which is what plays a role in the volatility of it all and creates inefficiencies in supply and demand. Solutions don't need to be complicated.
Blockchain Is Still Young
We must all bear in mind that blockchain technology is still in its early days. Though it has been in existence since 2008, real-world applications of it have been relatively scarce and only a few years old. The most popular blockchain platforms, Hyperledger and Ethereum, still lack actual maturity.
Though blockchain did manage to disrupt numerous industries with a bang, companies have yet to truly figure out the various ways they can use it to their benefit. In doing so however, businesses that are exploring blockchain must bear in mind that they must proceed with caution. The likelihood of setbacks taking place during implementation is high, as is the possibility of critical software bugs and risks that are generally posed by quantum computing.
There are experts who also feel that blockchain is not (yet) a fit for all transactional business processes. This is because blockchain applications outside of cryptocurrencies can often take more time and cost more money to deploy compared to traditional transactional technologies. This isn't ideal for business applications that require transaction settlements to be instantaneous.
Generally speaking, blockchain software contains bugs- lots of them. These bugs require developers to consistently create workarounds to mask how immature the software actually is, and oftentimes isn't even worth the consistent effort, as coding vulnerabilities can lead to disastrous breaches.
But again, that doesn't mean blockchain is necessarily all bad.
Great for Managing Data, not Storing Data
Blockchain is fantastic when it comes to several aspects of data management. It is convenient in the sense that you only need to write once to append many for distribution. It's easy to deploy across different nodes on the web, and is immutable because each record contains its own hash. Distributed ledgers through blockchain can provide a far more comprehensive transaction history when compared to the selective views typically seen on internal systems.
Despite these perks, it's not necessary for the data that's related to transactions to be a part of the chain. For example, if blockchain users included images in their transactions, that would lead the network overhead to grow as the data capacity grows, given that append-only data storage gets bigger over time. It makes more sense for companies to use a relational database with separate networked storage that's reserved for certain transactional tasks. That will prevent the growth of blockchains from getting unmanageable, whether public or private.
Neither Type is Perfectly Secure
There are pluses and minuses to public and private blockchain. Public is open and transparent, while private is carefully administered and only allows authorized individuals to join. They are both immutable, and natively more secure than most other networking technologies. But there is still room for error that must be considered.
It's safe to say that blockchain networks have never been hacked, but they have broken numerous times due to insecurities in the software itself. This is the reason why we have all heard those stories of digital currencies being stolen through code exploits. One must also keep in mind that software vulnerabilities can stem from wallet providers. There are additional concerns that are worth addressing in blockchain technology.
Concerns in Scaling and Confidentiality
Blockchain technology in general steps in to replace intrinsic trust that lies between people/corporate entities with mathematical principals. It gets increasingly expensive to rely on these mathematical principals, because more nodes come into play as the environment gets more intensive. As each record inserted into a blockchain gets serialized, the rate of updates get slow, which doesn't make sense for corporate environments, especially with minimal benefits from all the efforts.
Since public blockchains are open and transparent, all transactions are visible which also isn't ideal for commercial environments that handle delicate transactions that are best kept out of the public eye to withhold sensitive information.
Overall, blockchain is revolutionary in many aspects for offering new trust models. However, the technology needs more time to mature, and the market needs more time to figure out how to best make these new trust models work for them.