If we talk about streamlining the traditional authentication process, blockchain technology has shown enormous power as it demands transparency & scalability. Blockchain is said to be the most innovative technological advancement that has already captured a good portion of large-scale industries. The past few years have seen phenomenal growth in the embracement of blockchain technology. Blockchain is considered a breakthrough technology because most marketers make it out to be, but it has a long journey.
What Is Blockchain?
Whenever we hear the word blockchain, the first thing that comes into our minds is Bitcoin, and the majority of people consider blockchain as a cryptocurrency. Both of them are two completely distinct things. You can consider the blockchain as a network and cryptocurrencies such as Bitcoin – the most reputable cryptocurrency effortlessly tradable via https://bitcoins-evolution.com/ – products that run on the blockchain network.
The composition of this network is duly reflected in its name. The basic factor of this system is a chain of blocks that keeps a record of data in chronological order. It relies on the technology of distributed ledger that shows the chain is not kept in a single central device, but every single node that is linked to the blockchain can access the data.
Problems With The Blockchain Technology
Blockchain technology contains loopholes in several domains making the widespread adoption of blockchain a distant prospect. Some of the problems existing in the blockchain are described below:
- The designs of blockchain technology vary in terms of structure. Some designs are safer than others ones. For instance, decentralized blockchains are 51% more prone to attacks than centralized blockchains. It has created a few issues for the crypto fanatics that are holding their funds on decentralized blockchain networks.
- Another security issue faced by blockchains is known as flash loan attacks. These attacks are commonly used against the ecosystem based on Decentralized Finance as they offer unsecured loans. The majority of the networks contain low KYC requirements. Thus, attackers can utilize arbitrage flaws to falsify the token’s price and divert profits back to other networks, efficiently money laundering.
- In addition to these attacks, coding flaws are also an issue for blockchain networks. The blockchains that are centralized are more susceptible because attackers have to weaken some particular failure points. In many cases, entities with keys of the blockchain system, like private keys, are aimed.
- The centralization of information is another security issue faced by the blockchain system, particularly in blockchains that depend on extraneous sources. Some of the blockchain networks, for instance, rely on the Oracle system for the identification of pricing on their networks and it has led to significant losses in many cases.
The bigger the blockchain, the more susceptible it becomes. The superfluity of blockchain systems makes them difficult to scale. Each device in the network should contain a copy of each transaction processed. This means that there would be 100X copies of similar data. For this purpose, massive storage is required. And the size of the blockchain has a direct relation to the power required by the nodes because a bigger size means more power is needed for processing. Even if all of your virtual, software & hardware requirements are covered, it would be unimaginable for you to manage the blockchain.
If we draw an analogy between a centralized system and the blockchain, this technology consumes a lot more energy. One of the reasons behind their enormous energy consumption is their overabundance. The transaction authentication process of blockchain technology also plays a huge role in power consumption.
First of all, the storage required by them is more than any other mechanism. The power required to run the nodes is then multiplied by the total number of nodes in the blockchain. Every single node keeps and processes the amount of data equal to that stored and processed by a central body in another network.
These were some of the biggest problems of blockchain technology, with Security Issues being at the top because the data, nodes, and even the entire network are vulnerable to attacks 24X7. So, blockchain is not foolproof.