According to Apiumhub, the average investment made in blockchain projects last year was $1 million. In 2024, it’s expected that the global blockchain market will be worth $20 billion. While it’s true that blockchain technology has the potential to transform all industries, from the finance world to supply chains, there are some who still consider crypto assets as speculative. The newly released game, Etheremon, has just discovered why blockchain continues to fail going mainstream.
Etheremon is an application that has been built on the Ethereum network. It allows you to capture, evolve, and trade your Ether monsters or Etheremons. Because the network uses blockchain technology, the application is decentralized, and no one can control the Etheremon world.
Upon the release of the game, several problems have popped up. The Ethereum network clogs up. Transactions become slower. Transaction fees have increased. In other words, Etheremon has just unearthed the most crucial stumbling blocks of the blockchain.
Problem 1: There’s poor governance system.
One of the biggest advantages of blockchain is its decentralization. However, this has proven to be a two-edged sword. Because no one is officially given control of the transactions, the making of critical decisions is slow.
Let’s take for example the Bitcoin Segwit2x initiative to improve Bitcoin scalability. Three years ago, leaders agreed on increasing the blocksize. However, in November last year, they had to abandon the initiative because of the lack of sufficient consensus.
Problem 2: Blockchains don’t scale.
The scalability of the blockchain technology is one of its most pressing issues. While decentralization has offered security, authenticity, and political neutrality, it comes at the cost of scalability. Why? Nodes process transactions and keep a copy of the state. However, the number of transactions made using blockchain can’t exceed the single node participating in the network. The more nodes used in the network, the weaker the blockchain gets.
This is what happened with Ethereum. Currently, the cryptosystem handles about 800,000 transactions a day. However, when Etheremon has blown up, Ethereum frequently reaches their transaction limit, which is at 15 transactions per second. Many users fail to successfully make their own transactions, and fees become higher.
Problem 3: There are no regulations.
As of now, users have been embracing the self-regulation approach. Anyone can invest in any projects from any parts of the world. Transparency and auditability are at risk. There’s also the issue of money laundering. Because there’s no law that protects your transactions, there’s no way you can get back the money you might lose in your investments.
Problem 4: There is lack of privacy.
Blockchains usually use the distributed ledger technology, which allows full transparency on all transactions that happen. However, there are vital pieces of information that you just can’t share with anyone. The lack of privacy can actually have a degrading effect on the monetary system. It may even destroy the money itself.
Blockchain needs to provide the right balance for financial privacy. Its goal should be to avoid profiling with the use of crypto transactions.
Problem 5: Blockchains need interoperability.
There are already more than 1,300 cryptocurrencies in the market, and the number is still growing. This means that devising a way to allow blockchains to communicate with each other is getting more and more necessary. This should be done in order to align blockchain protocols.
Faced with all these problems, it seems like blockchain technology has still a lot to go. However, the mainstream market may not yet close its doors to it.