Different Platforms used in Blockchain Technologies. Part - 1
(By Shivkumar)
BITCOIN
Scalability has remained one of the challenges, and updates to the code have been controversial.Bitcoin uses the Proof of Work algorithm to timestamp the transactions and validate the blocks. These efforts have resulted in several forks of the Bitcoin blockchain, although the underlying technology remains more or less the same.
1) Limited Scalability
Blockchains like Bitcoin, Ethereum have consensus mechanisms which require every participating node to verify transaction. This limits the total number of transactions a blockchain network can process. Currently Bitcoin can process 7tx/sec at maximum.
2) Privacy
In case of public blockchains, transactions on blockchains might appear private since it is not directly tied to your identity. But since they are recorded on public ledger, transactional patterns can be observed and it is possible to link your identity to the address.
3) Storage Constraints
Data storage imposes a huge cost on a decentralized network where every full node has to store more and more data into infinity.For reference, the Ethereum blockchain is growing at the rate of 55 GB/year.
4) Access to external data
Suppose if blockchain service retrieves some information from an external source, this retrieval is then to be performed repeatedly and separately by each node. But because this source is outside of the blockchain, there is no guarantee that every node will receive the same answer.Either way, the consensus is broken and the entire blockchain dies. Therefore blockchain interactions are limited to on chain data.
5) Unavoidable security flaws
This is called a '51% attack' and was highlighted by Satoshi Nakamoto when he launched Bitcoin.
For this reason, Bitcoin mining pools are monitored closely by the community, ensuring no one unknowingly gains such network influence.
6) Unsustainable consensus mechanisms
Blockchain have known issues with consensus protocols like proof-of-work schemes.However POW isn’t perfect. Only 1 block gets mined each second in BitCoin blockchain. This means that the rest of the computational power spent on creating a new block has no value. Bitcoin Energy Consumption Index, Bitcoin’s current estimated annual electricity consumption stands at 29.05TWh, which represents 0.13% of total global electricity consumption. Roughly Bitcoin mining is now using more electricity than 159 individual countries.
The above represents challenges for the success of Blockchain technology. Consistent efforts are being made out by developers to knock the problems out of the blockchain space.
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