Is Blockchain Overhyped or Immature?

One of the biggest blockchain-inspired startups, the R3 Consortium, has determined that blockchain is not needed for the problems in the finance industry that it set out to tackle. So, is blockchain technology overhyped or not mature yet? We will found the answers in this article. Let us go deeper.

Is Blockchain overhyped or immature?

What is Blockchain?

To understand why blockchain is overhyped, you first must understand what it is and what are the business problems it is trying to solve. 

A blockchain is a growing list of records called blocks which are interconnected by utilizing cryptography. Each block contains a cryptographic hash of the previous block, a time stamp, and exchange information. Utilizing blockchain we can safely store information over the shared system, where everybody can see but can’t do any alteration. The problems that blockchain is trying to solve inevitably are storing relevant data, ensuring its accuracy, and making it available to the correct stakeholders.

All of these can be achieved by database technologies other than blockchain. Furthermore, the biggest challenges are not solved by blockchain. One of the greatest challenges is ensuring the accuracy, validity, and integrity of data entering the database. Blockchain does nothing to prevent a false affidavit or a license obtained by bribing officials from being recorded in the ledger. Another challenge is getting various parties to agree on common conventions for exchanging data and adapting legacy systems to support those conventions. Finally, there is the cost of cleaning and converting data from legacy systems.

Blockchain is slow

Blockchain is slow, due to the heavy nature of trying to copy data to multiple databases and heavy cryptography, it will always be slower than a central database or even normal decentralized databases. Blockchain can’t be read like a Database, it can’t make joins, you can search on a field, it's completely useless at this at efficient data retrieval and manipulation.

Actual Implementation of Blockchain

Blockchain only solves the problem of making it harder to alter data without detection once it is in the chain. Digital signatures, Merkle trees, and linked timestamps also accomplish this. These technologies have been around before the release of Bitcoin and are critical components of a blockchain.

True usage of blockchain adds a tax of copying transaction information to and maintaining it at many blockchain nodes, which number in the thousands for Bitcoin and Ethereum. Private blockchains, in which nodes are explicitly established by some organization, would likely use fewer nodes. This situation would then be not much different from other database technologies that provide redundancy and business continuity.

The End Notes

Blockchain itself is not such a world-changing technology and is not mature yet. Some of the software marketed as blockchain has implementations of useful components and provides protocols for data exchange and verification. Thus, blockchain marketing might promote the adoption of this software, even if people make do not use a full blockchain. That's all in this article. I hope you liked it. If you have any thoughts about this, do share in the comment section below. Have a good one.

Cheers!