The buzz about blockchain technology reached a fever pitch in late 2017 and early 2018, following the surge in the trading value of cryptocurrencies like Bitcoin and Ethereum along with sustained hype about the use of blockchains for everything from supporting elections to streamlining logistics.
However, even with all of this new attention, blockchain today is, at best, in a comparable position to the internet in the decade before the World Wide Web's 1991 launch – theoretically useful, but yet to see its breakthrough use case. In that regard, it's also on similar footing to current technologies like software-defined wide area networks, which are fascinating technical concepts with a long way to go before widespread adoption.
On one end of the spectrum, some technology commentators think blockchain has yet to even prove its utility and are skeptical of it ever doing so. On the other end, blockchain is imagined as triggering a watershed moment in consumer and enterprise technology. So which is it?
Another angle: Blockchain is a powerful innovation, but adopting it still requires overcoming significant obstacles. Let's look at a few of them and then at how they might be addressed.
The problem: In IT, the biggest technological breakthrough of the past 15 years has probably been the advent of cloud computing services. The cloud has many value proposition, with one of the most cited being its planetary scalability. Instead of needing to continually add more assets to on-premises infrastructure, cloud users can simply change their subscriptions and tap into the service provider's virtually unlimited resources. Blockchain isn't nearly that scalable yet. The blockchains supporting popular digital currencies have often strained under the pressure of numerous concurrent users.
The solution: Blockchain is just one technology among many underpinning major projects like cryptocurrency and logistics systems. It's possible to weave in additional protocols that can boost performance, without needing to make painful changes to the ledger implementation itself.
"Blockchains are incredibly energy-intensive."
High energy consumption
The problem: Blockchains are incredibly energy-intensive. In June 2017, a paper presented at a World Economic Forum conference estimated that the Bitcoin network alone might consume as much electricity as the entire island of Cyprus. All of this power is necessary for solving the complex cryptographic problems intrinsic to blockchain design and for powering and cooling down the computers across the network.
The solution: Switching from proof-of-work (the current dominant consensus mechanism, i.e., model for verifying blockchain transactions) to proof-of-stake could dramatically lower consumption. With proof-of-stake, you only have to demonstrate ownership of a certain amount of money instead of going through the arduous process of solving math problems with an energy-hungry PC or ASIC.
The problem: Blockchain is widely perceived as a positive development for cybersecurity, since individual blocks are usually immutable. That's only part of the story, though. Blockchain technology is still vulnerable to 51-percent of attacks, which involve someone gaining control of more than half the mining capacity on a network and thus being able to control how transactions are approved and tokens are spent.
The solution: Permissioned blockchains, which require anyone joining to be screened prior to approval, can help control the entry of potentially risky participants. Alternatively, simply allowing a lot of users to join the network could be helpful in ensuring that everyone's share of the total mining power is sufficiently diluted so as to prevent someone from dominating the network.
In navigating these challenges and others, it's helpful to have the assistance of an experienced IT solutions provider such as Paramount. Reach out to our team today for help on everything from patch management to IT staffing services as you ramp up your blockchain efforts.