Everyone knows of the Bitcoin and the blockchain technology associated with it. But what is important to find out is if this platform is without shortcomings and weaknesses. On investigation one will see that the existing blockchains have many limitations that are standing in the way of their mainstream adoption. The Bitcoin, founded on this blockchain technology, made its debut a decade ago and ushered in a new era of digital currencies. The Since then the Bitcoin has continued to gain a lot of legitimacy amongst many populations and even a few governments. Bitcoin has reached heights and has gained popularity among public. Several automated bitcoin system app are in place to make trading process legitimate. However, the Bitcoin continues to be plagued with some major problems still:
- Scalability: While the Bitcoin may be fascinating as it is completely decentralized and there is no centralized bank regulating it, at the same time, this demands an exceptionally high level of trust. As a result, the numbers of transactions that can go through during a specific period of time are limited. However, as more and more people have shown an avid interest in cryptocurrency investing in recent times, the blockchains have also been put to a test. The earlier blockchains began showing limitations in transactional throughput due to their inherent design. All mining has been done so far on a linear blockchain and even with an increase in mining capability, the scalability has not improved. This means higher transaction fees, over congested mempools, and debates on forks. The SegWit was launched to limit data in every block to enable more transactions but even this was met with dissent and the hard forking of Bitcoin into BTC and BCH or Bitcoin Cash happened. A second layer solution has been devised in the form of the Lightning Network which seeks to open linked payment channels payments could be made within without a bilateral channel.
- Ecosystem: The blockchain had established a programming ecosystem and smart contracts ushered in new computational laws. According to this contracts were to be backed by blockchains that are unbiased. However, this too had design flaws and creating complex applications became a challenge.
- Security: While the first-generation blockchain design did focus on security and reports of vulnerabilities were far less, the security for applications has not been as good. Inadequate and inferior application layer security led to many hacking incidents. So, there remains much room for growth in the blockchain security area.
- Usability: Developer tools today are quite basic and these need third-party tools for filling in the gaps. Since third-party developers have so far not been keen to offer feature-rich tools there have been adverse effects on the system security. Because of insufficient frameworks now third parties are slowly stepping up to offer centralized solutions to enable multi-platform availability.
- Governance Mechanisms: The first-gen blockchain platform had not foreseen the administrative challenges that a decentralized system would face in the absence of any centralized party. A proof of this is in the Bitcoin forks and debates that show why there should be some system of governance. So, a solution to this will be that developers must agree with others in the Bitcoin ecosystem to set some standards, features, etc so that things are in control without compromising the basic tenets of a decentralized blockchain.