As amped as I am about blockchain and cryptocurrency, there is a great deal of reality that needs to be applied to the excitement. There are a number of significant challenges and threats, some we know of but many we don’t.
The three most significant challenges I am watching at the moment are : the legal basis and threats; the scaling issues; and what we don’t know!
Both crypto and blockchain are asking new legal questions about decades old laws and practices, this leads to a very challenging legal environment. Around the world there are different legal issue/questions being asked, here are just a few from that past couple of weeks.
Russia to Recognise Bitcoin as Legal Japan Makes Bitcoin legal China Bitcoin Exchanges Remain Closed Eurozone Say Distributed Ledger Technology too early for adoption Bitfinex and David and Goliath legal battle with WellsFargo
The Scaling Issues
Basically, if Bitcoin or Ethereum or another blockchain cannot work out how to accommodate very very significant transaction volumes (for example Visa does 50,000 transactions per second!) fast and with a low cost, the crypto world will never cross to mainstream.
What We Don’t Know
To be clear, what the cryptocurrency community is trying to achieve is the creation of a global currency that works entirely electronically and is not controlled by a centralised party.
This is cutting edge stuff for the development of the human race, it is hugely difficult and while we like to have faith that it will all work out, it may not!
In this interview Ethereum developer Vlad Zamfir explains some of the challenges he and others are working on.