The blockchain can’t change the world, but it’s a good start Posted on : Oct 02 - 2018

It’s hard to find a tech news site that doesn’t have at least one article in the headlines about how blockchain is going to change the world. The decentralized technology behind Bitcoin and other cryptocurrencies has been credited with the potential not only to disrupt our modern banking system, but to completely revolutionize industries like healthcare, investing, messaging, and even voting.

The way I see it, the blockchain has been completely overhyped. This is a marvelous technology, and one worth using for some important applications, but it simply doesn’t have the potential to change the world, nor can it be used universally across industries.

The problem with private keys

One of the biggest selling points of blockchain technology is its ability to keep things private and secure. Users rely on private keys to commit exchanges and verify their identity, which makes it incredibly difficult for those identities to be forged or stolen. But if consumers are left in charge of keeping track of those long, complicated keys themselves, and they need several unique keys (one for each of the blockchain-related services they use), it’s only a matter of time before they lose track of them or corrupt them. And since password-resetting isn’t an option here, consumers have the potential to lose access to their accounts much more easily.

And yes, you could use a single solution to consolidate these keys, with a traditional password that grants access to them—but at that point, the system becomes just as vulnerable to hackers as a traditional password-based system. The bottom line is that these private keys, while very secure, aren’t consumer friendly enough to be readily and securely deployed on a large scale.

The scalability problem

The blockchain also faces a well-documented scalability problem. The entire system depends on information entries in the form of blocks, with transaction records hypothetically dating back to the system’s existence. Each new block requires a community of existing participants to verify the transaction’s entry. This system works fine the way it is now, with 60 transactions per second with Bitcoin, but as the system gets bigger, its storage needs increase and the time it takes to process each transaction slows to a crawl. Considering Visa’s peak rate of 47,000 transactions per second, it’s apparent that the current generation of blockchain technology can’t be used efficiently for large-scale endeavors. View More