Blockchain: Lessons I Learnt
Having recently completed my degree recently, I was looking reviewing my academic journey so far especially my final year. The highlight of any final year is the capstone project and mine was on the blockchain. A year ago, I had decided to do a capstone based on the blockchain and in doing so understand this technology that has taken the tech space and the world by storm. My focus was on the security aspect the technology could provide.
1. It is still early days. I had read the seminal paper Bitcoin by Satoshi Nakamoto but that was only scratching the surface. There are several types of blockchain — public, private or hybrid — each comes with its own context and use cases. There is no standard yet unlike some of the other traditional technologies in use today. I had to be very careful when installing or updating components in my development environment. A seemingly insignificant update broke my project once and it took me a few days to find and rectify it.
2. Blockchain is complex. Blockchain takes a while and a good bit of reading before even peeking into the realm of understanding it. Though it has quite revolutionary applications, getting a buy-in from end-users is not a walk in the park. Aside from enthusiasts, if these stakeholders are unable to see the benefits uptake of the technology will be very slow. Bitcoin made headlines only after the financial crisis of 2008 when trust in the financial markets was low. With the markets and industries within which blockchain can be implemented relatively stable, blockchain is still a hard sell.
3. Blockchain can be slow and cumbersome. The decentralized ledger which is one of the highlights, can grow to a large size making syncing difficult and slow. They are computer files after all and suffer the same. Once again the complexity of encryption, decentralization Bitcoin transactions can take hours to finalize. This means that quick purchase might not be as quick as initially thought compared with traditional payment systems.
4. High electricity bill. In the way it is being used today, it does. Bitcoin is a valuable network — with a market capacity of over US$170 billion as of writing. With the Bitcoin algorithm, as microprocessors get faster (Moore’s Law) the algorithm gets more difficult as well. This means a huge energy footprint for the network. Smaller networks might use a fraction of that but still the energy question and environmental impact still has to be considered. Before Africa can benefit from this technology, we need to address the energy problem on the continent urgently.
5. Lack of regulation creates a risky environment. Bitcoin and other cryptocurrencies are volatile with some even predicting it as a huge bubble. OneCoin — a recent high profile case was revealed to be a Ponzi scheme that is believed to have robbed investors millions of dollars. The fact is that tech moves many times faster than legislators can keep up with the innovations. This leads to easy pickings for those with the FOMO (fear of missing out). Even the so-called “safe” coins such as Bitcoin and others are susceptible to hacking or government shutdown either in an online wallet or the coin exchange.
6. The “establishment” wants blockchain to fail. In all honesty banks and other middlemen that blockchain is poised to replace make huge profits in their roles. As much as they might preach support for the technology in public, they quietly hope for it to fail. Its openness makes it difficult to exert control over it hence back in 2015 one former boss at a big bank described the interest and apparent enthusiasm of the sector as “cynical”.
As much as these issues pose significant hurdles, blockchain is still evolving may still have more in store to surprise us all.
