- 6 June 2021
- Posted by: btcbros12
- Categories: Articles, Bitcoin, Blockchain, Cryptocurrency, DeFi, Economics, Ethereum, Funding trends, Future Finance, Innovation, Technology
Blockchain technology has been touted by experts as a potential game-changer in the tech space and eventually for the world. However, for now, the benefits of blockchains remain limited to cryptocurrencies and proof-of-concept projects. The technology has to be deployed on much larger scales to get the public aboard, with significantly less environmental impact. This is aside from the fact that most blockchain-related services are still only utilized by tech-savvy people. We need much more simplification in this space before blockchain products are ready for mass adoption.
That being said, we have come a lot closer in the last half-decade than ever before. Not a long time ago, cryptocurrencies had no liquidity, which means their prices would rise and fall purely speculatively. As more robust cryptos like Ethereum, Chainlink, Cardano, and others started entering the space, developers got the tools to build projects tied to real-world use cases. Better blockchains were developed. Soon after, stablecoins were released, whose value is fixed with respect to some regulated currency like the US dollar or gold. All these factors combined paved the way for everyday people to consider investing in cryptocurrencies and believe in the future of blockchain.
However, mass adoption is a different challenge. To get your average joe to believe in blockchains, there are a few hurdles that the technology has first to overcome. Many clients and people ask us exactly when all of this will become the ‘norm’?! Well, that can be anyone’s guess, but…let’s take a look at what is stopping this revolutionary new technology from going further in adoption today.
Blockchains have an image problem
For the layman, understanding the difference between cryptocurrencies and blockchain is not easy. Very few people even know of the term “blockchain”. In fact, the technology’s intimate association with cryptocurrencies has proven to be detrimental for mass adoption. In its nascent years, the crypto market witnessed some high-profile hacks and exit scams, which led the public to be wary of these so-called “unregulated currencies” from the get-go.
If mass adoption is to be achieved, people must be aware of the fact that the scope of blockchain technology extends beyond cryptocurrencies. They must understand the benefits of having a decentralized and democratic system of information storage and transfer. While a lot of collaborative efforts are underway to make blockchain services that are removed from cryptocurrencies, it will take some time before those efforts come to fruition.
Corporate and Governmental Push for Blockchain Technology is low
Most financial institutions and government agencies have been keeping away from adopting blockchains due to a multitude of factors. For starters, the decentralized nature of the technology poses a threat to capitalism. Big businesses would lose market share due to an inability to have unanimous control in a world of blockchains.
For others, blockchains are too technical to implement. Even for numerous industries that have seen significant transformation by adopting technology, blockchains represent a radical shift in how things are processed and business is conducted.
On the government side of things, it’s a power struggle of a different flavour. By nature, all cryptocurrencies can be bought and traded worldwide. A number of central financial regulatory bodies believe that such ease of foreign transfer and currency conversion may give rise to money laundering operations. Several countries such as Nigeria, Bolivia, Turkey, and Ecuador have already issued blanket bans on cryptos, while India is on its verge.
As discussed earlier, the intimate bond that cryptocurrencies and blockchains share indicates that if cryptos are banned, blockchain technology will see little to no development in those countries thereafter.
Low Scalability and Ease-Of-Use
Blockchains today, even the best ones, are inefficient and complicated. One single transaction on a decentralized network can take from a few seconds to several minutes, depending on congestion and several other factors. For instance, The Ethereum blockchain can only handle 15 transactions per second (TPS), whereas the Bitcoin Blockchain can only do 7 TPS.
For mass adoption, these numbers have to be scaled up, and the carbon footprint of blockchains has to be reduced. There is a need for plug-and-play interfaces, similar to how the current-gen mobile or web applications work, to get the public comfortable with blockchain services. Simplifying the setup processes and designing faster and easier-to-use interfaces will allow users to understand the non-technical value of blockchains.
As hinted earlier, blockchains could also have a terrible ecological impact. Each transaction conducted on the bitcoin network releases about 300 kg of carbon dioxide. The total power consumed by cryptocurrency mining operations worldwide is about the same as the energy required to run Norway. Blockchains need to become much greener to be implemented on a large scale.
The State of Blockchains in 2021
It would be unfair to say that blockchains haven’t come a long way since their inception in 2008. Today, the total value of all cryptocurrencies stands at $2.4 trillion, and various industries are rushing to get into this space. The invention of smart contracts that can automatically execute their encoded terms and conditions has dramatically helped generate liquidity.
Blockchains also have the potential to shift the one-sided paradigms in many industries. A number of services have emerged that let artists sell their work directly to buyers in the form of NFTs and cut out the middlemen. Non-fungible tokens or NFTs are tokenized smart contracts rapidly becoming the go-to way for collectors to own unique digital items. The total value of the NFT space has risen to over a billion dollars in a few short months and has managed to create a lot of interest in blockchains.
In the long run, blockchains can build a fully decentralized and inclusive worldwide digital economy that can potentially solve the poverty gap. They can also produce universal ID systems, which will help disenfranchised people easily verify themselves and keep track of their assets. The potential of blockchains to create more intelligent and more efficient AIs is another area of great interest.
In conclusion, we may not be very close to mass adoption, but some brilliant people are working quite hard to make the day come as soon as possible.
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