While much of the tech industry has grown bearish on the volatility of cryptocurrencies, enthusiasm for its underlying technology remains at an all-time high. Nowadays we see “blockchain” cropping up with impressive frequency in even the most unlikely startup pitches. And while blockchain technology does have genuinely interesting and potentially powerful use cases, it has enormous drawbacks for consumer applications that get little mention in media coverage.
My background is developing virtual worlds similar to Second Life — MMOs where users create, build, and usually sell their virtual wares to other users. In principle, blockchain should be my holy grail, enabling user-to-user micropayments without a middleman. But it’s not that now, and it probably won’t be for a long time.
Well, I would certainly agree with Adam about the hype surrounding the blockchain!
Adam says current blockchain technology has three drawbacks:
- Blockchain cannot be everything it aspires to be at the same time, being caught between three competing objectives: fast, low-cost, and decentralized.
- Blockchain can become a customer support nightmare: no recovery mechanism if you lose your wallet, handling refunds, etc.
- Blockchain adds friction to an already seamless process: a need for (re)training consumers, the speed of transactions and transaction fees, etc.
Adam sums up:
As I said at the start, none of this is meant to suggest blockchain isn’t a worthwhile technology. And there are some early attempts underway to address the problems I’ve raised. But to become truly viable, blockchain tech is going to need fundamental improvements that require thousands of minor changes — or, perhaps, a radical rethink of the key ideas.
It’s a good read, so I encourage you to go over to the full article on VentureBeat and read it in full.