Blockchain Adoption: The 5 Main Challenges for Mass Use

by | Aug 22, 2022 | Blog, Blockchain

Blockchain adoption is a new and exciting topic and has tons of potential to bring forth innovations that could revolutionize the very concept of property, whether it’s for financial assets, digital art, intellectual property, or just about any type of digital data.

However, the challenges of blockchain adoption are still many, and those challenges need to be overcome before the technology is massively adopted. In the eyes of many people, NFTs are nothing more than a pointless luxury in the best cases and a scam in the worst.

What is Blockchain Technology in Simple Terms?

The simplest way in which blockchain can be defined is as a ledger software that records and validates transactions automatically, but instead of requiring a central entity to manage it, it relies on community members who lend their computing power for the software to operate, in exchange for a reward.

Although this might not sound like a great deal on its own, it opens up a world of possibilities, one of which is allowing the creation of decentralized digital currencies and other financial systems that don’t need to rely on banks or other centralized financial institutions.

Through the creation of non-fungible tokens (NFTs), the concept of digital ownership can be taken to a whole new level. Likewise, blockchains can be used to create autonomous decentralized organizations (DAOs) with automated decision-making processes, as well as various forms of internet applications where users can create and share content by monetizing it with more independence than ver. 

However, before blockchain technologies can be massively adopted, there are various challenges that need to be overcome.

The 5 Main Challenges of Blockchain Adoption

Here are some of the blockchain challenges that need to be overcome in order for the technology to be massively adopted and live up to its full potential:

1. Education and Understanding.

The lack of a proper understanding and, thus, proper regulation of blockchain technologies has largely hampered the willingness of people to accept and learn more about them. This isn’t helped by the fact that NFTs and cryptocurrencies are often misused for different types of fraud.

When news about blockchain and cryptocurrencies makes it to most media outlets, it very often shows these technologies in a negative light. Sadly, things like scams, market crashes, and what seems like overpriced NFT images tend to make for attractive news headlines and end up becoming many people’s ideas of what blockchain constitutes. 

In order for people to get a proper idea of what blockchain is, there needs to be blockchain education beyond the technical intricacies of how the technology works, focusing instead on the positive things that can be done with it.

Many industries, including healthcare, energy, and finances, are employing blockchain to optimize their processes and benefit both producers and consumers. DeFi platforms are being employed to make financial markets more accessible and transparent, and organizations are applying DAO concepts to create incentives for their members.

Likewise, the use of NFTs goes far beyond digital art and collectibles, allowing for new and groundbreaking ways to define the property of countless types of assets, incentivizing creativity by giving creators many new ways to monetize and consumers new ways to access digital products.

Through education, all of these innovative uses of blockchain technology can be taught to a broad public leading to a higher general acceptance and a larger possibility of adoption.

2. Accessibility

As of today, things like creating a crypto wallet, coining an NFT, trading NFTs and trading crypto are generally perceived as too complicated to be worth the hassle. This perception is strengthened by the fact that the ways to liquidate cryptocurrency to get cash are still not as common as convenient for most people. 

When people start to learn about crypto, they come across many terms like hash rates, hubs, private kets, public keys, proof of work, proof of stake, and so on. Although it’s important for people to understand these terms in order to invest in blockchain projects, for cryptocurrencies and NFTs to be truly accessible, the casual user shouldn’t need to worry about this.

Increasing accessibility in the blockchain space can be achieved by having more streamlined platforms with simple user interfaces that everyone can quickly understand, coupled with better education about the lingo and functionality of blockchain. Although many DeFi platforms are making great advancements on this front, there’s still a long way to go for blockchain to be accessible enough.

3. Volatility 

Cryptocurrencies are meant to be more than simple instruments for financial speculation. Their purpose is to be fully-fledged currencies that people use in their everyday lives to purchase services and goods. However, this cannot happen until the problem of volatility is solved. 

Volatility means the tendency for an asset to change its value in a short time. The faster an asset changes its value, the more volatile it’s said to be. Compared to other currencies, the highest volatility crypto tends to vary in their value at an extremely fast rate. 

This is a problem when it comes to the ability for people to buy goods and services with crypto, and for retailers to sell them, because volatility in a currency makes the prices of any goods bought with it far too unstable, particularly for large businesses with long chains of production.

In terms of investment, volatility can make cryptocurrencies an attractive investment for investors with a high level of risk tolerance but would do businesses that adopt it as a form of currency are unattractive for long-term investors.

4. Energy Consumption

This is one of the most widely discussed problems regarding blockchain. Blockchains like Bitcoin, in particular, which use Proof of Work (PoW) consensus mechanisms, require exceptionally large amounts of energy to validate transactions.

High energy consumption poses many issues regarding scalability, which can be particularly troubling as blockchain is massively adopted. Bitcoin alone consumes the equivalent of 0.55% of the total energy consumption in the world. 

Although this might not sound like much on its own, it is a huge amount taken in hindsight.

The current traditional financial system consumes almost twice as much energy as bitcoin, but it should be considered that the traditional financial system is used by 70% of the world’s population and hosts every fiat currency, digital transactions, and brick and mortar establishments.

Many solutions are already being thought of for less energy-consuming blockchains, from miners that are powered entirely through clean energies to more sophisticated consensus mechanisms and algorithms that allow for much more efficient transactions. 

One example of this is the Solana blockchain whose transactions take less energy than a google search.

5. Value Creation

The concept of value is an endless philosophical discussion. In modern liberal schools of thought, it is generally agreed that value is subjective and measured in the markets. Under this pretense, many blockchain platforms are thought of as simple speculation tools that see their prices increase as more people buy their tokens.

In order for blockchain to overcome many of the aforementioned problems, it will eventually need to move from the field of financial speculation to focus on creating economic value rather than just market value. 

This is to say that blockchain technologies can fulfill a role within chains of production and the creation of revenue streams in order to live up to their potential and improve people’s lives in a tangible manner.

This is already being achieved in many ways, from fun blockchain-based platforms that employ reward systems for users to encourage them to share their content, to digital systems and ledgers that allow organizations to operate more efficiently. 

These types of value-generating products, services, and systems should become the norm rather than the exception when it comes to blockchain in order to pave the way for true mass adoption.

Why Blockchain Adoption Challenges Should Be Overcome

There should be efforts by the whole NFT and blockchain community, not just to educate about the potential of blockchain technologies in a vast range of fields but to push the industry forward in terms of its accessibility and value generation.

Blockchain technologies have the potential to generate a paradigm shift in the ways in which people interact and communicate. 

Economic interactions will be amplified and made more accessible by virtue of decentralization. Organizations will become more efficient and give people more agency over their role in them, and art and creativity will have new ways to be propagated and accessed, with higher incentives for their creation.

However, this will only be possible if blockchain as a technology and overarching concept is able to overcome the main challenges in its way towards mass adoption. If this is the case, blockchain could lead to a technological, creative, and financial revolution beyond our imagination.

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