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Blockchain Semantics Blog The limitations of Blockchain

The limitations of Blockchain

By Swati Keswani | April 6, 2018, 8:30 a.m. GMT

There are landmines and violent convulsions in the journey towards maturity of any foundational technology.

Some do believe Blockchain is overhyped, over-celebrated. Our point of view on this is that this is how any technology grows towards mainstream adoption. You will hear a lot of positives and you will hear a lot of negatives.

Having said that, there are a few very real challenges that Blockchain as a technology will need to overcome.


Blockchain technology is not fit for mainstream yet. With terms like SHA-256, Proof of Work, Proof of Stake, Nonce dominating the vocabulary, it needs to go through the process that the internet did. You are comfortable using the internet without really concerning yourself with TCP/IP, HTTPS, switches etc.

While Blockchain has made cryptography more mainstream, glossaries and a drastic simplification of the jargon will definitely help.

Network size

Blockchains are only as strong as the network size. The larger the network, the more secure and anti-fragile they become. Needless to say, it calls for a large network of users, however.

This becomes a huge topic for discussion especially in the case of private networks. By virtue of being controlled by a private entity or a group of private entities, it may have fewer independent nodes. Is it even Blockchain then?

Transaction costs, network speed

Enough has been written and said about the high transaction costs on the Bitcoin network. Bitcoin started out as a democratic, near-free means of exchanging value for the world’s population. Ironically, its own success now stands I the path of its success. With its increased adoption, network congestions and high transaction costs have become an unnecessary reality.

Other Blockchains like Litecoin, Dash etc. are trying to tackle the problem of network congestion heads on- the jury is still out though.

Then, there is the problem of the size of the Blockchain. A full node on the Bitcoin Blockchain stores the complete Blockchain ledger locally. The size of the Blockchain becomes a problem because the full node will have to store all the transactions that have ever happened on the Blockchain.

Human error

Blockchain can be thought of as ‘garbage in, garbage out’. The data going on the Blockchain is immutable, permanent. If the data stored on the Blockchain is inherently untrustworthy or inaccurate or riddled with errors, there is very little Blockchain can do about it other than holding the garbage unchanged forever.

Unavoidable security flaw

The ‘51% Attack’ is a security issue that was mentioned by Satoshi Nakamoto in the very first Bitcoin white paper published in 2008. If more than half the nodes on a Blockchain network collude to edit, change or remove a data already recorded on the Blockchain it can be done.

Bitcoin mining pools have been growing in size and influence over the last few years- the possibility of a few pools colluding to control 51% of the nodes in the entire network is not imminent right now, but definitely not unimaginable.


Where there is a democracy, there is politics. Blockchain networks tend to be governed by developer communities following their own written and unwritten rules or a ‘constitution’ if I may. Several Blockchains do not have the typical corporate governance structure.

It leads to debates and disagreements, sometimes heated and very public, even spilling onto Reddit threads and Twitter timelines. Think of it as a bad thing for the inherent showboating involved. Think of it as a good thing in the interest of transparency!


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