Those in the cryptocurrency room are well aware of the many benefits of blockchain and crypto . This technology can streamline many processes and produce many innovations in various sectors. Even so, experts agree that there are still some major challenges that keep crypto and blockchain from mainstream adoption.
Take a closer look at the challenges and what people in the crypto room have done to overcome them.
Regulation and Lack of Regulation
Regulation is a significant challenge for cryptocurrency and blockchain. This is especially true given that many jurisdictions still do not have rules for crypto while others have implemented restrictive regulations. Lack of regulation causes a lack of trust in cryptocurrency due to the simple fact that people are more confident when they know there are third party regulators. After all, the rules are there to uphold standards and protect consumers.
In addition, the current lack of regulations makes it difficult for crypto and blockchain companies to plan. These companies expect regulations to arrive at some point, but until they do, there is no way to know what will happen. Because of this, the companycrypto must make guesses on the rules, so that their plans always meet legal requirements.
Overcoming Regulation
Unfortunately, regulation is not something that the crypto world can actively work to overcome in the same way as other obstacles. This is largely in the hands of regulators. However, those in the room can work to influence future regulation or lack of regulation.
By showing regulators and the public the application, security, and benefits of blockchain and crypto technology , industry players can push regulation in a favorable direction.
Scalability and Cryptocurrency Infrastructure
offers comfort, but not always very measurable. Bitcoin is a perfect example of the problem of scalability. When developers first created Bitcoin, the blockchain was not designed to handle the high transaction volumes that are currently in demand. In fact, the original block size on the Bitcoin blockchain is only 1 MB. This helps with security, but also makes it impossible to process large numbers of transactions at once.
Bitcoin has increased the block size, but still faces severe scalability issues. This is because the community cannot approve the ideal block size, which has led to some difficult forks and new cryptocurrency in the past.
Overcoming Scalability
Another cryptocurrency has arrived with greater scalability than Bitcoin. You can find dozens of cryptocurrency that focus on scalability, including Aion, Bitcoin Cash, DASH, EOS, Litecoin, Plasma, QuarkChain, and Zilliqa.
There are also solutions like the Lightning Network. This is an additional layer that operates through the blockchain and can theoretically process transactions without limits. Payments are not recorded in the blockchain until all transactions are completed. The biggest challenge for Lightning Network today is security. There are also other second-layer scalability solutions, such as Plasma, Raiden Network, and Trinity. Raiden Network works without chains in the Ethereum blockchainand allows users to use private channels, offering Ethereum versions of Lightning Network.
Energy consumption
Mining cryptocurrency uses a large amount of energy, making this energy consumption another obstacle faced by the blockchain and crypto . This is a significant problem with coins and certain consensus mechanisms, especially with Bitcoin. Blockchain requires computational power for the Working Evidence consensus mechanism to work. The complexity of the problems that must be solved by computers, which increases electricity usage.
Overcoming Energy Consumption
Many blockchainsusing alternative consensus mechanisms that don’t require a lot of computational power. Block and cryptocurrency that depend on mechanisms with lower energy expenditure will be able to overcome this problem. They can show that blockchain technology does not need to consume large amounts of energy, and there are alternatives.
Joy
Many people hesitate to adopt cryptocurrency because of its volatility. Because the crypto world currently exists , setting prices in crypto does not make sense. You can buy something with a crypto equivalent of $ 10 today and have a crypto amountwhich is the equivalent of $ 100 tomorrow. This will be good for you but bad for the seller. Or, the opposite can happen, and you lose money while the seller gets the money. With the risk of changes in value so high, many people see paying with crypto too risky.
Overcoming Volatility
One way the crypto industry works to overcome volatility is through stable coins. These are coins pegged to fiat currencies that are more stable. Tether is probably the most famous stable coin, and pegged to the US dollar. In fact, many of the current stable coins are pegged to the US dollar because of perceived stability.
Difficulty of Use
For many people, blockchain technologydifficult to use, like cryptocurrency . Although the process of getting crypto currencies is easier, you still have to learn the difference between public and private keys and go through a few steps to use them. In terms of blockchain technology , it works differently from traditional databases, which means there is a learning curve.
Overcoming Difficulties Using
Cryptocurrency has become easier to use every day. You can now buy it using a credit or debit card from various crypto exchanges . Crypto ATMs now allow you to buy cryptodirectly with familiar feelings. Many new coins aim to make it easier, so using crypto is the same as completing fiat transactions.
To overcome the challenges of this difficulty, those in the blockchain space must work to provide an intuitive user interface and expand community knowledge. Providing free educational resources, as many websites do, is a good starting point. This needs to be shared more broadly and in various formats, from video to image to text explanation.
Simplifying the use of crypto and blockchain requires a combination of efforts. Those who are behind the blockchain projectmust remember end users to create user friendly projects. At the same time, the entire community must ensure that those who want to learn how crypto and blockchain technology work can find resources to understand the industry and platform.
Outreach through access to information must include those in power, both in various industries who can benefit from the blockchain and in government. When those in power realize that blockchain and crypto offer benefits, they will likely take the time to seek understanding. Creating a knowledge base that can be accessed further encourages this.
Fraud and Fraud
Concerns about fraud and fraud related to cryptocurrency and blockchain projects have somewhat damaged its reputation, posing challenges to mainstream adoption. Some of these fraud or fraud problems come from fake projects that get money through initial coin offers. In theory it is possible for anyone to disguise themselves as a team with a great idea and host an ICO, receive funding, and never do anything with it.
Overcoming Fraud
Unfortunately, without regulations, people have to take their own steps to avoid fraud. Just as you are responsible for not responding to phishing emails asking for your bank info, you are responsible for confirming the ICO that you want to invest appears to be legitimate. You can do this by searching for realistic claims, white papers, information about team members, and other available information.
Hacks
Even as blockchain and crypto technology evolves, hacking continues. Because most of the wallet and crypto currency exchangedo not have any type of insurance, hacking can cause credit card holders to lose a lot of money. With this continuing to be a problem, there will be natural doubts as to the adoption of cryptocurrency . Unfortunately, it looks like hacking won’t stop completely in the near future. Only in the first half of 2019, hackers took tens of millions of dollars from various attacks.
Overcoming Hacks
Most cryptocurrency exchanges are actively working to overcome hacking problems. After all, fear of hacking will turn potential clients away, losing exchange money. To some extent, crypto exchangemust continue to make progress and improve their security measures. This includes offering prizes or other prizes for finding bugs or hacking entry points and having a special team working to prevent hackers.
In addition, exchanges must ensure communication among themselves. If one exchange pays attention to suspicious behavior that could be hacking but stops it, the other exchange will be the next target. The first exchange must warn others so they can take action.
Exchanges also need to start applying insurance to client funds. This will give clients the confidence that even if their funds are lost due to hacking, they can get it back. This will be the same trust people have when placing fiat in a traditional bank. Unfortunately, there are still very few companies that offer this type of insurance for crypto exchange . The exchange must encourage the creation of this insurance offer, and inventories will eventually appear.
Reputation
Because of problems such as hacking, fraud, and fraud, cryptocurrencyexperiencing a bad reputation. Even in cases when appropriate security measures exist and a bad reputation is not justified, it will continue to deter potential adoption.
Overcoming Reputation
To overcome the challenges associated with its reputation, cryptocurrency needs to show that it can be trusted. Using the various solutions outlined above to reduce hacking and fraud is a good start. There may also be an increase in reputation with the introduction of regulations because people will know that cryptocurrency and blockchain projects must meet certain requirements.
Personal
Some people express concern about cryptocurrencyand privacy, largely driven by public ledgers. This ledger is an important part of crypto because it allows transparency, but also means that information about transactions is publicly available. Theoretically, one can find out how much money you have based on a public ledger and decide if you are worthy of being targeted in an attack.
Addressing Privacy
Some cryptocurrency truly goes beyond privacy, offering a high level of anonymity. Certain blocks hide information about the sender and recipient by default while others offer this option. Some cryptocurrencywith prominent privacy including Bitcoin Private, DASH, Monero, Verge, and ZCash.
No Urgency Another major obstacle is the fact that many do not see the need for blockchain or cryptocurrency technology . These people feel that the current system is fine and does not require any changes. In many cases, people are completely unaware of how blockchain technology can improve their industry. In the case of crypto , this is a factor, but greed is another factor.
Banks do not want crypto to be the way of the future, because they will lose money with exorbitant fees. Because they don’t want cryptodeveloping, they give the impression to the public that there is no urgency.
In other cases, there is opposition to the idea of starting a completely new system from scratch. People with this position argue that our current system is functioning properly, and you should not start from scratch if something is not broken.
Overcoming Lack of Urgency
The best way to overcome the lack of urgency that many people feel about crypto and blockchain technology is to show the benefits associated with it. Show those who work in the supply chain how to blockchain technologycan help them track their inventory and prevent counterfeiting or theft. Show international retailers how accepting cryptocurrency can save money with conversion costs.
When people realize that cryptocurrency and blockchain technologies offer benefits, they will want to get those benefits sooner rather than later. This desire will bring a sense of urgency, and as such, inspire adoption.
The Takeaway
From regulation to concerns about fraud, blockchain technology , and cryptocurrencystill faces many challenges that must be overcome to achieve widespread adoption. Fortunately, those in the blockchain industry are well aware of these challenges and are actively working to overcome them. The blockchain space is full of innovation, and that innovation must lead to the ability to overcome obstacles and increase adoption.
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