Blockchain and Cryptocurrency technologies have brought about many benefits to businesses and government organizations. However, there are still many difficulties hindering widespread adoption of these applications. Here are four obstacles for Blockchain and Cryptocurrency adoption.
1. De-centralization & Transparency can be a double-edged sword
The ability to tweak and alter transactions are important management tools for big organizations, like governments or businesses. The decentralized and transparent nature of transactions that are recorded on the Blockchain prevents organizations from making active changes to historical transactions. As such, this discourages regulators and policymakers from mandating and implementing Blockchain technology before ensuring that security protocols and proper operating procedures are readily installed.
2. Costly to switch and integrate technologies
While Blockchain and digital currencies can improve the efficiency and security of transactions and applications, it is still a relatively new technology that can be difficult or costly to be integrated with the infrastructure of many bigger organizations. For example, switching technological platforms usually cost a lot of money. Most banks or government organizations may still be using legacy systems that are inefficient and inadequate, but the costs and benefits of a complete overhaul of the system will not make sense, especially if the adoption of Blockchain solutions do not present a clear business case before.
Additionally, Blockchain applications often require the large scale integration of data from the entire industry to leverage on the decentralized network. In order for it to be effectively implemented, the majority of players from the industry needs to agree on the processes, the costs and the value for each particpant in the Blockchain project. As such, it would take a lot of time and effort for coordination before the entire industry can integrate this technology. Consequently, while many bigger organizations are eager to adopt Blockchain and Cryptocurrency, there are clear infrastructure obstacles that restrict most Blockchain solutions to be a smaller-scale project that is reserved 'for the future'.
3. Regulatory difficulties
At the recent G20 summit, global leaders acknowledged the benefits of adopting Blockchain technologies and arrived at a common consensus of having an International Cryptocurrency Tax for cross-border payments, in order to handle issues like Anti-Money Laundering and Countering Financing of Terrorism. Governments are generally pretty cautious about new technologies - preferring to implement adequate regulatory frameworks (which could take a few years) before fully adopting Blockchain solutions. G20 forum: “We will continue to work together to seek a consensus based solution to address the impacts of the digitalization of the economy on the international tax system with an update in 2019 and a final report by 2020.”
Additionally, the nature of a decentralized network raises questions about the regulatory clarity of the sovereignty of data. In the context of Blockchain technologies and cryptocurrencies, like Bitcoin, the sovereignty of data governance is often questioned. Although encryption is possible on the Blockchain, not many big organizations are comfortable having their private data transacted, received and stored on separate nodes on a decentralized network. Therefore, this could possibly hinder the adoption rate of many Blobkchain applications.
4. Technology still considered really new
Blockchain technologies and cryptocurrencies needs to prove its value first before conservative businesses are willing to take the plunge. The newness and complexities of the technology, coupled with the security concerns has hindered full-scale market adoption. Blockchain and Cryptocurrencies are still in its early stages and the market for it is not fully mature. Therefore, most business are on a 'wait-and-see' approach. Nevertheless, the real-world applications for Blockchain and cryptocurrency will only increase and improve in the future. It will only be a matter of time before businesses will learn to leverage on its technological advantages.