Contact us anytime to know more - Kuldeep K., Founder & CEO CISIN
Understanding the technology and its implications is important to get to the bottom. Blockchain is still a mystery. You might not know what you can expect in the future from Blockchain. It is difficult and very difficult to predict the future. The blockchain implementation architecture, which is still not standardized, is one of the most important issues. We will then discuss the current blockchain problem and how we can solve it.
Top 10 Enterprise Blockchain Implementation Challenges
Rising Cost for Blockchain Implementation
The cost of the entire process is one of the biggest challenges in blockchain implementation. Most existing blockchain platforms are inefficient in terms of speed and energy consumption. While the bitcoin network does only three to five transactions per second, it consumes a lot of energy.
Enterprise blockchain platforms work in a similar way to bitcoin. The bitcoin network was the first blockchain-based technology to be discovered. However, enterprise blockchain platforms have made significant progress in terms of transaction speeds.
Hyperledger Fabric claims speeds up to 3.500 TPS, which is almost twice as fast as the VISA platform. Hyperledger Fabric is incompatible with proof-of-work platforms such as bitcoin and therefore consumes less power. However, this does not mean that implementation is easy. First, it is important to find the right people. Additionally, the majority of software requirements are very expensive.
The bottom line is that you must be willing to pay for the convenience of the new technology. This includes joining the consortium that pushes enterprise blockchain projects, which are largely private. Let's look at blockchain problems and solutions in the next segment.
Low Scalability
The problem of the inability to service many users is the challenge facing blockchain technology and enterprise blockchain technology. Companies that can scale up their enterprise blockchain platforms and reap the benefits of increased enterprise blockchain demand will be well served.
The technology must handle sufficient throughput to be adopted by mainstream organizations. There are many ongoing projects to find ways that enterprise platforms can maintain high transaction speeds even when there are many users. Enterprises with a lot of customers will need to think about scaling technology.
Unfortunately, many of the existing enterprise blockchain networks are not yet tested to this extent. This is one of the major blockchain implementation challenges currently. Large banks are not using an enterprise blockchain network such as Corda or Hyperledger Fabric to determine success rates.
It is unlikely that any institutions would be willing to risk the possibility of it backfiring on them. Enterprise blockchain projects must ensure that they can prove that their platforms can scale by actually using them. Let's now examine the problems and solutions to Blockchain in the next segment.
Low Data Privacy
Enterprise blockchain's greatest selling point is its ability to decentralize operations so that users don't need the assistance of intermediaries. It is also one of the biggest challenges in blockchain implementation.
Indeed, many enterprises wouldn't appreciate it if anyone could view their data, even if it were sensitive to their core business. Let's take the difficulties of implementing Blockchain in the Supply Chain.
Let's say that Company A and Company B are competitors in shipping. Let's also assume that both companies are interested in joining TradeLens, a blockchain-based supply chain solution that digitizes shipping operations.
TradeLens, for example, is an implementation of Blockchain in supply chains where shipping companies can access data about goods. The solution is also run on Hyperledger Fabric, where all interactions are peer-to-peer. All participants have easy access to any type of data via the distributed ledger. This means that Company A can access any data related to Company B.
Company A and Company B may be business rivals. Company B will lose any leverage once Company A sees data that should not have been kept private. For example, Company A will stop Company B from making any strategic or surprise move. Company B's business will suffer as a result.
This makes it unlikely that companies will join such a platform. Enterprise blockchain projects are working to address data privacy concerns if they want to make enterprise blockchain a mainstream technology.
Insufficient Knowledge Base on Blockchain
Blockchain technology is still in its infancy. Not surprisingly, many new solutions are innovative and technical for most industry professionals. The problem is that the companies don't have the people to understand Blockchain and, by extension, enterprise Blockchain. This is yet another reason why blockchain implementation problems are hindering the sector's growth.
The lack of information by organizations about aspects such as choosing the right enterprise blockchain platform is a major problem. The firms also lack knowledge about the proper steps to implement blockchain technology to achieve the best results and maximize its use.
Blockchain technology can resolve many previously difficult problems. Blockchain technology is expected to be used in almost every industry, from supply chain management to identity and management. Organizations must know their blockchain requirements to choose the right enterprise blockchain platform.
The organization must have sufficient knowledge of Blockchain to achieve its objectives. They could also look to hire external talent to fill in any gaps. The problem is that there are not enough skilled people to achieve this goal. It is, therefore, difficult for companies to implement blockchain-related projects.
Transitioning from Legacy Networks is a difficult task.
The transitioning phase from legacy networks is another challenge in blockchain implementation. Most of the things that Blockchain is trying to change were already in operation before it came into existence. The industries delivered services and products to customers, despite any difficulties. The industries were particularly used to the legacy structures and standards they established. This is a major challenge when implementing Blockchain, especially in the supply chain.
The people working in these industries are well-versed in the existing legacy structures. They will not be intimidated by any attempt to introduce new structures. The financial sector is one of the most vulnerable sectors to the blockchain revolution. The sector has created structures to guide service delivery.
VISA is used for trans-border transactions. Banks use SWIFT and various other methods to move cash in bulk. These structures are so well-established that it will be difficult to create new ones. This is what Blockchain is doing, which is quite interesting. This technology fundamentally changes the nature of operations in every way imaginable.
As we have discussed previously, legacy systems are so deeply embedded in the industry that people may be reluctant to experiment with new systems. People in the financial sector could be resistant to blockchain technology because they don't know enough about it or fear it will lead to job losses.
No Technology Partners
Blockchain is an emerging technology. As we have already explained, many people still don't know much about it. It is important to note that there is no clear roadmap for how Blockchain will be implemented in organizations. It is important to note that the absence of clear standards results in a lot more information than is useful.
However, there are steps to make the process easier for enterprise blockchain users. Before you jump, it is important to identify the right technology partner who can guide you through the maze. But there is another problem. How can you tell if you have found the right partner, and who is the best partner?
This is a significant challenge in blockchain implementation when entities seek to implement the technology. An organization can find the right partner to help them implement the best blockchain roadmap.
There are currently umbrella projects such as Hyperledger, Enterprise Ethereum Alliance, and other enterprise blockchain platforms like Corda and Microsoft Azure. These private platforms are primarily for blockchain-focused organizations. Realistically, the cost of blockchain implementation is prohibitive. It is prudent to find a partner to implement the technology.
Even though there are many high-profile partners, getting on their platforms can sometimes be expensive. The existing platforms are becoming increasingly popular and could quickly become overcrowded. Given the high demand, obtaining customized services in such an environment isn't easy.
Read More: 20 Biggest Misconceptions People Have About Blockchain
Security Issues
There are many challenges to deploying Blockchain. Blockchain's resilience to cyberattacks is one of its greatest selling points. However, there are many risks to the blockchain sector from bad actors. Notably, hackers are being exposed to parts of the blockchain industry due to the speed at which the technology is being implemented.
Technology is not perfect. There are many vulnerabilities due to insecure processes and defenses. The chances of someone falling for phishing scams are high, for example. A lack of standards for development means that malware is often lurking in the industry. These vulnerabilities, along with implementation exploits and technology vulnerabilities, present a serious threat to users who are not aware.
Users are constantly looking for private blockchain networks to avoid security issues. These networks are not accessible to the general public and require authentication before they can be accessed. These platforms are used to run various enterprise blockchain projects.
Private networks are not as autonomous as public blockchain networks. This is because the "presiding node" tends to restrict what participants can do. This restricts users' ability to use the platform how they want.
The public blockchains are secure so anyone can run a node in the ecosystem. A bad actor can attack a platform and allow them to initiate a double-spend of coins. This could cause the platform to lose credibility. Anyone who has invested in the ecosystem is likely to suffer losses.
Criminal Activity
Implementing enterprise blockchain is a difficult task that touches on the technology's 'cleanness. The technology gained global popularity due to two events.
It brought to light bitcoin, which could have a major impact on the financial sector. Second, it seemed to stop high-profile criminal activities like money laundering. It was also interesting to note that bad actors could use the technology for large amounts of cash taken from other countries. This problem exists even today with Blockchain! The study found that criminals use digital currency to settle suspicious transactions on internet-based marketplaces.
The study also revealed that cybercriminals used crypto to request ransom in cases where there was a Distributed Denial-of-Service (DDoS)attack on computers. The result was that Blockchain became unlikable. Potential users of blockchain technology must be aware of the possibility of criminal actors using the platform for their criminal activities.
The bottom line is that there is a certain fear among potential users who aren't ready to get involved in a scheme they don't like. It is the fear of such incidents that hinders potential users of the technology. This is one of many major problems in blockchain technology deployment.
No Regulations
This is one of many blockchain challenges that has solutions and potential. Some government agencies are reluctant to let the technology grow due to the many unfortunate incidents mentioned above. Amidst the complexity of the technology, regulators find it difficult to establish the legal framework for it.
A blockchain network is made up of many nodes distributed around the world. Therefore, it is difficult for authorities to determine the jurisdiction and the parties' legal obligations once a transaction has occurred on the platform.
It is difficult to see how the EU's General Data Protection Regulation (GDPR) will work in the face of all this legal confusion. The regulation grants digital rights to data stored on a Blockchain platform. Blockchain platform users can operate anonymously. Expert observers are unsure how effective the GDPR would be in such an instance.
The fact that the GDPR provides some data protection makes matters even more confusing. All participants can view the data on the distributed ledger, but they cannot alter it. Users cannot view all transaction data. This is because data minimization, a property of the blockchain network, prevents users from seeing all transaction data. This is evidence that data in a blockchain network has been protected.
However, it is important to note that the blockchain community does not know the law about this emerging technology. This concerns many enterprise blockchain users who are second-guessing their choices.
Enterprise Blockchain Platforms Interoperability Not Available
As mentioned earlier, there are many enterprise blockchain platforms currently in existence. Each project aims to offer specific solutions to users. Hyperledger Fabric excels in supply chain management, while R3 Corda excels at financial industry solutions. There is a disconnect between these platforms which makes inter-platform navigation difficult.
Developers must solve the problem of enterprise blockchain interoperability if they want to see widespread adoption. One should be able to join Hyperledger fabric and use services on Corda and Microsoft Azure without serious compatibility issues.
This is one area where the Blockchain ecosystem has many challenges and offers solutions and potential opportunities. Interestingly, two of the most well-known enterprise blockchain application platforms, Enterprise Ethereum Alliance (and Hyperledger), met last year with an eye toward the problem.
The projects hoped to collaborate so that they could solve the interoperability problem. The agreement also included establishing standards to guide the implementation and use of enterprise-level blockchain solutions. Despite all the excitement surrounding the meeting, interoperability is still a big issue. Interoperability, a software property, determines whether it can be adopted by mass.
There are many software programs out there, each with its users. Users of different software must have the ability to interact with each other and do meaningful business. This is why enterprise blockchain interoperability is needed to encourage mass adoption.
Final Words
You now better understand the risks involved in blockchain technology deployment. This will help you make an informed decision about whether or not you want to use it. Blockchain technology is the future, even though there are still problems with blockchain technology today. Blockchain technology is advancing with the times. This will help to eliminate these issues.
In many cases, companies already use private blockchain technology to address these issues. Suppose you're just starting and are interested in learning more about the technology and its issues. This could be the beginning of your blockchain journey.
