Leaders across a wide range of industries have joined the disruptive tech community in grasping blockchain's transformative potential. Currently, thousands of fledgling projects, joined by a growing number of giants (e.g. IBM, Microsoft, and Amazon), are actively working to demonstrate blockchain’s potential in major industries like finance, healthcare, and supply chain.

Given the fervor, one question resounds: why isn’t there widespread blockchain adoption?

The short answer is because blockchain adoption is challenging. In this post, we’ll explore the details which include issues in scalability, talent, cost, regulation, and interoperability.

What is a blockchain?

Before we begin, let’s first establish the definition of a blockchain. A blockchain is a distributed ledger that links a growing list of blocks, or a set of ordered data.

A blockchain’s distinguishing traits, compared to a normal database, is its resistance to tampering after data has been added to the network. The data itself is consistent across nodes, agreed upon by network participants.

Scalability

One of the biggest barriers to blockchain adoption is scalability challenges. Centralized transaction networks can process thousands of transactions per second (TPS). For example, Visa handles roughly 1700 (TPS) and has the capability to increase that number to 24.000. Meanwhile, Bitcoin and Ethereum, crypto’s leading blockchain networks, can handle three to seven TPS and approximately 20 TPS respectively. This drastic difference between centralized and decentralized scalability virtually bars mainstream services.

Potential solutions are in the works, IDEX 2.0’s own O2 Rollup highlights several viable use cases here.

Talent Shortage

For many organizations, blockchain adoption requires either a complete restructuring of their legacy system or configuring an approach to integrating both. Both processes require drawing from a talent pool that can’t quite yet meet the demands.

Blockchain development is still a nascent field. Like any other technological emergence, developer communities need time to test, learn, and grow. Colleges and other various educational institutions have only recently begun accommodation for blockchain-related courses, meaning talent pools still have some time before students turn into seasoned developers.

Enlisting the help of third-party developers can temporarily alleviate the shortage, but high costs (driven by the same talent scarcity) combined with the fear of data loss and third-party breaches are enough to dissuade businesses from taking the leap.

Cost

While this factor varies depending on implementation, the cost of maintaining a blockchain can be a nonstarter for some organizations. Traditional databases require data to be written only once. In comparison, the costs of maintaining a blockchain where data needs to be written, checked, and transmitted thousands of times are drastically higher.

Regulation

Part of blockchain’s appeal is its ability to introduce concepts like private keys and smart contracts to transform the way an organization runs. Ironically, because current regulations don’t address these features, they’ve become a source of friction in various applications. For example, healthcare services looking to utilize blockchain for direct and secure patient record sharing must also abide by HIPAA rules which exist in a lot of ways at odds with blockchain fundamentals.

We’re starting to see pieces of legislation acknowledge components of blockchain technology, but the major hurdles remain a work in progress.

Interoperability

While blockchain’s rapid growth through new projects and ideas is exciting, it’s also created an unstandardized and chaotic state filled with different networks and solutions that can’t communicate with each other. This state represents the space’s newness and the freedom it’s afforded many projects eager to disrupt. However, it’s nothing short of a nightmare for dev teams that need multiple platforms to communicate.

Several projects have begun work on enabling interoperability between blockchains and their progress is eagerly awaited by many.

The topic of blockchain is on an ascending trend with major industries expressing real interest in its adoption but, in short, blockchain adoption is challenging. Multiple issues in scalability, talent, cost, regulation, and interoperability remain. However, multiple teams are also hard at work to make progress against these challenges, bringing blockchain closer to its breakout moment.