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Blockchain Advantages And Obstacles On Road To Its Implementation

Published: 19/07/2018
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What is it for?

Lately, distributed data storage systems built in accordance with the blockchain principles have been actively developing. Users and supporters discuss their potential and expect them to radically change the world. Unfortunately, there are still too few real solutions that use blockchain in practice. Let’s try to find out the reasons why.

 

First of all, we should consider the main advantages of blockchain.

 

  • Simplicity of checking the database for integrity;
  • Clear timestamp of any change within the system;
  • Ease of real time data backup;
  • Users agreement in distributed media;
  • Simplicity of real time data validation.

 

All these blockchain features are important when it comes to the control of assets, ownership rights, decentralized financial or trading operations, voting results, etc. However, they are available only within the properly designed protocol, which is a set of rules used by the system.

 

As well as any other system, blockchain has a number of problems along with its positive features. They are:

 

  • Reduced performance;
  • Scalability problems;
  • Extremely large amount of data to store;
  • Additional control issues;
  • Responsibility reduction.

 

The mentioned problems originated from the very idea of decentralization. Hence, all system problems can be called fundamental.

 

Performance and scalability

 

The performance decrease and scalability problem are tightly connected to each other. Performance can be easily presented as the transition rate, i.e. a number of transactions carried out per second. Scalability represents how much time it takes to confirm each transaction when the number of members goes up. If the number of users increases, the system needs more time for confirmation. As a result, its performance drops.

 

Decentralized systems have less bandwidth than the centralized ones. As a rule, it takes a long time to reach the consistency of all changes within the system. The adopted decision should be common for all participants of the network, and this requirement causes numerous delays.

 

Storage capacity

 

Storing a large amount of similar data causes a lot of problems. A copy of the common database is kept by each participant of the system and is constantly updated. A classical centralized approach does not have such issues.

 

Additional controllability problems

 

If a company develops its product independently, the main reason for its decentralization is initially defined. This kind of purposefulness does not accept local initiatives related to the optimization. All improvements are implemented by a limited number of privileged users. If all users get the possibility to influence the rule changes, this may lead to unexpected and even harmful results.

 

The accounting system benefits from the correct use of decentralization. The more people get involved in the management process, the greater the potential for improvements is. Each participant can improve the system during the discussion.

 

On the other hand, the more people manage the system, the more complicated this process is, as a lot of time is required to reach consensus. In theory, the network users may refuse to come to the agreement that can lead to delays.

 

Responsibility reduction

 

Since the society is not ready for changes, the process of switching from individual responsibility to the collective one is slow and difficult. This affects the real implementation of distributed technologies. People are willing to have someone in charge who can be responsible for all decisions. This is the way the centralized system works.

 

The distributed system blurs the notion of personal responsibility. Responsibility is substituted by the risks that may impact all participants. The rules, available and understandable to all users, ensure the work of the system. Anyone can check these rules and their implementation by other participants.

 

The risks themselves are caused by possible users' actions and disadvantages of the existing rules, which may be used to attack the system. In case of attacks the centralized system happens to be less stable. But when it comes to decentralization, even developers have no mechanisms to influence rules without the public agreement. Any decision, including judicial, that does not correspond to the agreement protocol will not be executed. Such a novelty requires redefinition and change of the existing legislative base so that it can get along with new conditions.

 

Protocol change problems

 

There is a specificity of updating the rules of distributed systems. Each innovation proposed by participants can be accepted by the majority or cause disagreement. If the network members do not reach the agreement, this may result in blockchain forking. It means that two new systems will appear on the basis of the old one. They will exist simultaneously but according to different rules.

 

This is how Bitcoin Cash was separated from Bitcoin in 2017. The opinions of the network members were divided after the proposal to increase the block's size. As a result two systems started to work separately: Bitcoin Cash and Bitcoin.

 

After Ethereum blockchain had lost $70 millions of investments in 2016 after scam, the developers decided to rollback the system to call back harmful smart contracts. All stolen funds were returned but many users criticised the decision of the Ethereum creators. The proponents of the old protocol refused to leave it and called it Ethereum Classic, while the renewed one had kept the name of Ethereum.

 

In conclusion, it should be added that the correct implementation of blockchain leads to the transparency of a business model, infrastructure stabilization and audit clearance. Businesses can get an additional profit from partnerships as the users' confidence in the system will be increased.

 

On the other hand, the final implementation of these ideas will unlikely happen very soon. Various tasks, such as complex projecting, deployment problems and distributed system support, are to be solved yet.

 

 
Sergey Borsuk, Blockspoint
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