Overcoming blockchain adoption challenges — experts’ perspective

As the market stamp out bad actors of the crypto bubble, the blockchain technology is here to stay. More and more business leaders are seeking answers on how to fit blockchain into their strategies.

If you’re one of them — dive in!

We asked blockchain experts to answer 3 questions:

1. What are the biggest threats to the blockchain technologies?

2. What advice would you give to a company interested in blockchain implementation?

3. How do you see the next 10 years in the blockchain sector?

You can find advice from professionals committed to bringing true value to the blockchain community inside the ebook: “Blockchain Adoption Kit: 101 for business”. This short publication aims to raise awareness about blockchain technology and help in overcoming blockchain adoption challenges by:

• providing experts’ perspective on the future of blockchain,
• describing what blockchain technology is,
• giving an outlook on what to determine before adopting blockchain,
• defining steps in finding the right tech partner to put ideas into life.

Click on the image to get the eBook

How can CXOs have a clear view of the blockchain landscape?

Listening to what the ones that dedicated their work to embracing innovation blockchain technology present is a great way of embracing fast-pacing changes in any technology.

In this post you can find comprehensive blockchain insights from Cyrus Fazel, the founder and CEO of SwissBorg, a unique wealth management ecosystem powered by smart contracts and based on a Swiss meritocratic system, you can read his full story here.

What shines through his expertise is that blockchain tickles the curiosity of some and the skepticism of others, but all agree that even though the technologies face some obstacles, they are on their way to mass adoption on the institutional level. The ability to make a transaction, quickly, safely, and transparently from one computer to another is progress that cannot be ignored or taken lightly.

It is safe to say: Blockchain is here to stay.

Q: What are the biggest threats to the blockchain technologies?

1. Cybersecurity

One of the most obvious threats to blockchain adoption is the real and perceived lack of cybersecurity. We are all aware of a number of big hacks and exploits on the bitcoin or ethereum blockchain, but with every incident, there has been a resolution. For example, from when “The DAO” was first launched in 2016 until today there have been many hacks and exploits that have been disruptive and have delayed mass adoption. Emin Gün Sirer, the Cornell University computer scientist, helped identify weaknesses in the DAO code and revealed 10 new exploits in its code at an event in New York in 2016. While the vulnerability of the smart contracts built on ether was well understood it still posed a threat and many glitches remained to be fixed. DAO 2.0 was a response to the early vulnerabilities of blockchain that acted as a reference for future improvements and responses to exploits. There have been many exchanges that have had their hot or cold wallets hacked. For example, see Mt Gox, Bitfinex, Coincheck, Cryptopia, which were hacked for a total of over $1.5B. As with all technological advance, the longevity of an innovation depends on its ability to self-correct and improve. Blockchain’s decentralized and open-source nature makes its evolution and improvement a growing collective effort that will help the rapidity of responses to hacks in the future. It must be noted that cybersecurity threats have a negative impact on mass adoption and are therefore a double-edged sword that hurts the crypto space both actually and in terms of public perception.

Solutions

Cryptocurrency exchanges are vulnerable to penetration by hackers because in order to enable real-time withdrawals they need to keep part of their private keys online. Also, an investor’s crypto wallets on an exchange can be exposed if their email is hacked. So it is imperative that the crypto investor ensure the security of his/her crypto assets through the use of hardware wallets that bestow the highest level of protection.

• Hardware wallets empower users but also burden them with the responsibility of literally handling their own bank, and it should be noted that these wallets don’t protect against human error. In order to minimize risk, a crypto investor should follow steps to secure their assets.
• Cryptocurrency exchanges should be avoided for long-term storage. When using exchanges for storage it is best to use a two-factor authentication that is not limited to devices connected to the internet.
• The pin code should be easy to remember, secure and not easy to fathom. Above all, it is best for the crypto investor to always be aware and cautious of showing or storing information shown on the computer or smartphone screen.
• It is best to be mindful that software can be compromised at any time.

2. Energy

The biggest problem with Bitcoin is its carbon footprint. Bitcoin mining has a high cost of energy because it uses a colossal amount of electricity. For each transaction that is made on the blockchain, miners have to verify the transaction and update their ledger, this process of verification and updating is called Proof of Work. The community of miners on the blockchain replace the central authority and are therefore crucial to the successful implementation of transactions. Electricity is 90% of the cost of mining bitcoin, somewhere between an estimated 30 terawatt hours alone in 2017 alone.

Solutions

• Proof of Stake: is another way for miners to verify a transaction which is a more energy efficient solution to Proof of Work (PoW). The PoS algorithms require users to stake some of their tokens so that they can be selected to validate blocks of transactions. Those who stake the most and the longest have a bigger chance to get rewarded. To avoid having the wealthier miners acquiring too much of an advantage certain blockchains use a certain degree of randomized selection. A dose of chance has to be injected into the process to avoid always choosing the richest miners to validate transactions.
• Cleaning Mining: Iceland, with its huge supply of geothermal energy that renders the miners’ power consumption cheap, is a popular location for bitcoin mining because it relies %100 on renewable energy for its production.
• More efficient GPU (Graphics Processing Unit) The use of GPU rather than a CPU (central processing unit) because it makes the instruction rate given to a computer faster thereby using less energy.

3. Limitations of Scalability

Each transaction adds one more block to the chain of transactions. Each block, in turn, increases with data as it also stores the history of the blocks that preceded it. The more users join the networks, the more the transaction histories of individual coins grow the more it is prone to the danger of collapse. One example that clearly demonstrates this challenge to blockchain is the case of CryptoKitties and the massive congestion they caused for the ethereum blockchain back in December 2017 smack in the middle of the SwissBorg ICO.

Another issue facing bitcoin scalability is the relative slowness of speed for volume in Bitcoin transactions, for example, Bitcoin can perform 7 transactions per second as opposed to Visa’s 1637 transactions in the same time period. But we have yet to see blockchain platforms that can produce the speed and scale that big financial services and internet applications.

Solution

Most of us remember how long it took to connect to the Internet in the days of dial-up connection. Downloading pictures or songs on AOL Instant Messenger or Napster took the patience of Job. But with the advent of ADSL, then 3G, 4G and today we are able to download large files, whole movies in a matter of minutes.

A few POS protocols and private blockchains are already faster than Paypal and catching up with Visa. Soon we will witness many players in the space developing lightning speed networks that could be powered by new technologies like that is faster than any network.

Q: What advice would you give to a company interested in blockchain implementation or launching its own ICO?

First, a short definition:

The blockchain is the best infrastructure for accounting and making sure that transactions are properly recorded. A smart contract could settle a transaction based on anything that has been pre-configured by a person / IoT.

The advantages of including Blockchain:

• Tokenisation: opening new markets (countries and retail)
• Decentralisation brings new stakeholders and better way to expand and recruit
• Smart contracts to automate decisions and reduce human error risk

A company should take 5 steps before launching on the blockchain:

1. Define the nature and purpose of your token. Determine whether your token is a utility, security, protocol or a payment token.
2. Define the role your token plays in your ecosystem.
3. Leverage decentralisation to build a community-driven ecosystem.
4. Leverage encryption to build trust.
5. Choose the right platform for projects:

• Blockchain criteria: private or public blockchain, POW vs POS
• Technical specifications: such as speed of transactions, scalability, coding language, community existing industry players … Choose the right protocol to launch your token.
• If you are interested in launching your ICO please have a look at our latest presentation and let us launch together.

Q: How do you see the next 10 years in the blockchain sector?

The most inspirational promise of Blockchain is its ability to enable decentralised peer to peer transaction quickly, safely, and transparently. Transactions can be made in a myriad of cases. From young Chinese women who posted their #metoo letters on the blockchain to avoid government censorship, to connecting small unbanked farmers to investors around the globe, to revolutionising border logistics and communications in the shipping industry.

Financial Markets: Prediction #2: Trillion-Dollar Protocols

More companies with trillion-dollar tokens than trillion-dollar companies in ten years?

The four companies with the highest market value in the world, Apple, Amazon, Google and Microsoft are in a race for the top place in the “4 comma club”. These big companies hailed and now constitute a new economy. They are mature companies that have taken many years to transition and solidify their digital presence and footprint a form Web 2.0 (the new internet economy). With the advent of blockchain technology, many believe we have entered Web 3.0 where peer to peer transactions made possible by the new technology can transform the way we conduct our lives online.

According to blockchain advocates, all current asset classes such as stocks, bonds, commodities, derivatives will operate on the blockchain. More importantly, an asset class will emerge and eventually everything that holds value will be tokenised.

Ultimate Transparency Across Industries

The fact that blockchain is built as a distributed ledger that is both private and in the control of all those who use it, makes it useful in many industries. Ultimate transparency across industries can be reached because all changes to the blockchain are transparent and public. The use of a single digital ledger that is public makes it easy to catch attempts at hacking and avoids the confusion of multiple ledger systems.

Autonomous Negotiation And Trade

Technology is always progressing and blockchain is not an exception. After having laid the foundation for distributed consensus and exchange of value steps are being taken to secure distributed data and establish common standards. Once we achieve distributed autonomous applications in a few years the chance for autonomous negotiations and trade between applications opens making markets more efficient.

Government and administration

DLT-Based Government Systems

Dubai (UAE) has promised to replace all government systems with DLT-based digital structure by 2020, so it is safe to say that DLTs are here to stay and will grow over time. While the transition from paper to a digital system has commenced for some time, distributed ledger technology provides essential ingredients to make this transition easier: underlying trust, immutability and transparency.

Blockchain Identity for All

By 2030, a cross-border, blockchain-based, self-sovereign identity standard will emerge for individuals, as well as physical and virtual assets.

Many believe what email did for the internet identity systems will go for the blockchain. As of now identity systems or systems of identity verification are very dysfunctional, operate in silos and lack security. Identity systems based on the blockchain will eventually solve these problems by providing a single, and easy to use, source to verifying a person’s identity and assets.

Blockchain-based identity decentralises data collection, cross-verifies the data via a consensus mechanism, then stores the information on a decentralised and immutable ledger. It reduces the risk of security breaches, is much more efficient, reliable, and most importantly, it allows autonomy and self-sovereignty. In the near future, we will see government records such as birth certificates & marriage contracts on the chain. We can also have a future that relies more on trust scores and reputation for credit history, attestations and certificates such as university diplomas and professional degrees will be on the chain, as will medical and employment records. Being safer, easier and more accessible than traditional forms of record keeping blockchain will bestow high tech efficiency in all fields that require record keeping and trustworthy storage.

The internet, AI (artificial intelligence), IoT and blockchain technology, together, will usher a future where technology will promote human connectivity, transparency and progress. Blockchain will act as the backbone of this new world where technology, AI, and IoT will help us be better than what we have EVER been.

Curious to get to know the insights from 7 more blockchain experts?

Meet them all and grab your free copy of “Blockchain Adoption Kit” ebook here.