Difficult to Integrate

Blockchain protocols are difficult to integrate, especially when working with two different networks. Often businesses need to develop an integration layer that will enable communication between different tech stacks.

Lack of Standardisation

There is a wide variety of frameworks in blockchain but very little standardisation. Blockchain projects often have to take a step back due to this problem. ICOs, for example, have to deal with this problem as investors have no proper protection against the investment.

On the development side too, blockchain lacks standards that make it easy to access, develop and build. With different organisations working on their “own” blockchain or DLT version, it is hard to standardise them.

And since competition between different networks is fierce, they are not inclined to work together to standardise, which leads to security, privacy and interoperability risks.

High Energy Consumption

Currently, the most popular consensus method – proof of work – is carried out by each node competing to solve complex mathematical problems. Solving these problems as quickly as possible requires high-performance machines that require a lot of electricity to run.

The proof of stake consensus method is more energy efficient but still not as widely used.

User’s Role

As a decentralised network, blockchains don’t have a hierarchy or central authority. Each user is responsible for the private key used to access the information stored on the blockchain. Nor does blockchain have any restore or retrieval mechanism.

If lost, the user will lose access to their data and assets, which brings a lot of user-oriented risks to blockchain technology.

Also, malicious users are part of any system, and they can harm the entire network by taking control.

Blockchain developers need to instil safety controls in place that prevents one node authority over the network resources or the consensus method.

Scalability and Transaction Speed

Despite being touted for its speed, blockchain transactions can take a long time to complete, especially if the network is congested.

Given this problem, it’s difficult to add more nodes to the network, which affects scalability.

Regulatory Risks

Most governments have yet to pass regulations related to DLT and blockchain, and some states may make their own regulations. Additionally, implementing digital currencies will come with its own regulations.

Businesses have to remain agile and compliant with new regulations as they are passed.

Leaders need to know that blockchain is not the solution to every business problem. But for specific use cases, this technology can provide tremendous value.