What Are Blockchain’s Issues And Limitations?

At CryptoSwede we believe we are beginning to see a more global acceptance of blockchain technology by various sectors and industries. The insurance industry, the finance industry, and even social media platforms are all looking at ways that the blockchain could help them solve problems for their business. The advantages of the blockchain are all that anyone wants to talk up, but it is also accurate to say that blockchains also have some issues and limitations that could make their acceptance an uphill climb. Here is a look at some of the factors that limit the scope of the blockchain.


A blockchain is a decentralized and distributed ledger that is meant to record data and preserve it for all time. It is essentially a very complex piece of computer code that can be viewed by anyone that has access to the network on which it is run. Setting up complex computer applications is difficult and expensive. It costs a lot of money to hire teams of developers that can successfully complete such an operation.

Blockchain technology is still very new. This means that the number of skilled developers for blockchain applications is in short supply. The number is growing, but when compared to developers in other fields the number is very small. It can require years of development for a company to create its own blockchain, and when you consider that the technology is always evolving at a fairly rapid rate, the problem is compounded.

Blockchains also involve sophisticated cryptography. This is also a field in which comparatively few developers are skilled. It requires an entire new language to be learned, and entire new set of protocols.


A blockchain is a collection of data. Let’s take Bitcoin as an example. Each block on the Bitcoin blockchain can contain up to 1MB of data. Now, that might now seem like a lot but one must remember that data is not purged from a blockchain. It becomes a part of the existing record. A blockchain can become very large in a very short period of time.

It is also true that a vast network is needed to insure the continued operation of the blockchain. In a public blockchain the nodes on the network are used to verify the data that has been included and make sure it is correct. This network can become very large. It is impossible to harness the complete advantages of a blockchain without network participants, and some have speculated that this may pose a problem for those who are developing permissioned blockchains.


There are also transaction costs to deal with, especially with blockchains that underpin cryptocurrencies like Bitcoin. When Bitcoin was first introduced much was made about the fact that it was almost free to use. Over time, the cost of transactions on a Bitcoin network have risen substantially. In 2016 each Bitcoin transaction was costing about $0.20, and this could continue to increase.

Costs are not reserved for transactions on a blockchain. When we talk about costs we also have to factor in the expense that it would take businesses to set up their own blockchains. Developers have to be hired. Research and testing has to be paid for. It is not uncommon for many millions of dollars to be invested in setting up new blockchains.


One of the major limitations that is facing Bitcoin at the moment is the speed at which transactions can be processed. This issues is often referred to as scalability. About 7 transactions can be processed per second on the Bitcoin blockchain. VISA, in contrast, processes 24,000 transactions per second. Much of this can be attributed to the fact that Bitcoin blocks are limited to 1 MB in size.

Some new cryptocurrencies have worked to resolve this problem. Litecoin is one example and Ethereum is another. Yet , for all of the advances that have been made there is still a speed problem that has to be contended with. Speed would also pose a potential problem for blockchain applications that do not involve digital tokens.


A very simple yet devastating security flaw is inherent in the Bitcoin blockchain. It was even acknowledged by the token’s original developer, Satoshi Nakamoto. The Bitcoin blockchain is only as secure as those who are serving as nodes on the Bitcoin network. Nodes are charged with verifying Bitcoin transactions and keeping the blockchain correct. When new data is added to the blockchain, it must be verified by an agreement called consensus. In other words, a majority of the nodes must agree that the data is correct for it to be accepted.

In theory, just 51% percent of the nodes could tell a lie and that lie would then become truth. Let’s just use a very basic example. If 51% of the nodes reached a consensus that you sent 10,000 Bitcoin to someone else when you really only sent 1, the lie would be accepted as the consensus. This is the reason that Bitcoin mining pools are routinely monitored to make sure that nothing unethical is happening. It would be almost impossible to rectify such a flaw if it ever happened.


An ongoing barrier to the acceptance of cryptocurrency by the masses is government resistance. Some governments have even become outwardly hostile to the token, going so far as to ban cryptocurrency exchanges. It could certainly be said that the problem governments have with cryptocurrency is that they have no way to regulate its use. Many governments have been studying ways that they can make some type of regulation happen.

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Some governments don’t like Bitcoin because it represents a direct threat to their banking systems. It removes the hassles that are often involved with traditional banking such as international money transfers. And it would be correct to say that some governments probably don’t like the fact that they cannot track Bitcoin transactions and keep track of them for tax purposes the same way that they can monitor fiat transfers.

Blockchains are without question a beneficial technology, but they do have some hurdles to overcome before the technology can be accepted on a much larger scale.

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