Blockchain technology has really gained ground over the past few years. Aside from being implemented in cryptocurrency, it has also found its way into many other business domains such as ensuring proper voting to trade in fruits and vegetables.
A recent poll showed that many business industry professionals and leaders believe that blockchain has a disruptive influence. This means that it is likely to challenge, and possibly even offset the traditional models that have conventionally been sued by business enterprises.
However, there is concern that blockchain technology may not be ready for widespread application. Though it has been used within limited markets effectively, its efficacy in wider use has been called into question. Here’s why:
The blockchain is Much Slower Than Established Transaction Models in Larger Formats
Currently, Bitcoin and Ethereum are the mainstays of the cryptocurrency market. Their influence on the overall financial market is growing. However, they do not have the pace to compete with bigger names in the financial transactions domain like Visa or PayPal. On an average, Bitcoin can process only 7 transactions per second while PayPal sits way above at 193 and Visa 1667.
The reason why Bitcoin is so slow is the transaction model it has. If I want to send some crypto to a friend or collaborator, then I will need to forward the transaction code to the miners in that particular block. These people will then put this code in the block and help process the transaction. Naturally, this is much slower than what other models have to offer. Additionally, the transaction fees are also a factor and it will reduce the processing speeds significantly with scaling.
The same problem arises with Ethereum. Although technically ETH has the max transactional capacity of 1000 transactions per second, in practice this is much lower. Ethereum can only transact at the rate the receiver makes the effort to transact. Thus, the transaction speed is effectively capped off at 6.7 million gas. All this means that neither of these two cryptocurrency giants can really compete in the broader financial transactions market as of yet.
So, it is clear that blockchain technology needs an overhaul before it can be applied widely. This is necessary to ensure that the system thus established will not only work optimally, but also scale well. Otherwise, the paradigm shift might be very hard to pull off. At the very least, large businesses will test out blockchain before they apply it. So, technological advancements and improved functionality might very we occur before long.