Today, I’m diving into a topic that might ruffle some feathers: “Why Blockchain Might Not Survive.” Blockchain technology arrived with an array of promises many of which are enticing but perhaps not entirely necessary to daily life. Among these promises are the ideas of decentralization, community-led innovation, and ownership without oversight. Yet despite its appeal, several factors indicate blockchain may not last. Let’s explore why.
Blockchain’s Allure and Why It Clicks:
1. Community – Blockchain is strongly backed by a passionate, engaged community that believes in its revolutionary potential. The communal aspect adds a unique layer of resilience and optimism.
2. Movement – Blockchain has become a social movement, with people flocking to it for the promise of something new and transformative. For many, it’s not just technology, it’s a philosophy.
3. Decentralization – The decentralization of blockchain is arguably its biggest draw. It promises ownership free from any governmental or institutional control, appealing to people’s desire for autonomy.
Despite these powerful draws, I believe blockchain’s future may be in jeopardy. Here’s why.
1. Environmental Impact
Blockchain, particularly in proof-of-work models like Bitcoin, relies on massive energy consumption. According to the Cambridge Centre for Alternative Finance, Bitcoin alone uses more electricity annually than many entire nations, such as Argentina or the Netherlands. This environmental cost is staggering, and while there’s a movement toward more sustainable energy sources, these transitions are neither quick nor easy.
Example: Some blockchain projects, like Ethereum, have shifted to proof-of-stake models to reduce their environmental footprint. However, Bitcoin, the face of blockchain technology continues to consume enormous energy, raising questions about the broader viability of the technology if energy consumption remains unchecked.
2. Limited Real-Life Value
Unlike technologies such as artificial intelligence, which are interwoven into everyday life and convenience, blockchain lacks this same level of integration. AI is everywhere from virtual assistants to recommendation systems on Netflix making it sticky and indispensable. Blockchain, on the other hand, is largely optional and niche. Most people can go years without ever needing or even interacting with it.
Example: Blockchain applications outside of cryptocurrency such as in supply chain tracking or digital identity are promising but not widely adopted. For example, IBM’s Food Trust blockchain for tracking food supply chains has potential but hasn’t revolutionized everyday life for consumers in the same way other digital advances have.
3. Complexity and Cost
Blockchain technology’s complexity makes it challenging for the average user to understand or adopt. Concepts like decentralization, cryptographic security, and smart contracts are often hard to grasp for those without a technical background. Additionally, the relative cost of using blockchain, in terms of transaction fees and the hardware required for mining, further distances it from mainstream adoption.
Example: The steep learning curve is reflected in the crypto-wallet security issues. For instance, even well-informed users sometimes lose access to their cryptocurrency due to private key mismanagement, as was the case with the story of James Howells, who lost access to 7,500 Bitcoins by misplacing his key. This level of user responsibility and complexity is hard to reconcile with mass adoption.
4. Increased Association with Fraud and Cybercrime
The anonymity and untraceable nature of blockchain transactions have made it an attractive tool for cybercriminals. Since transactions on the blockchain are often irreversible and untraceable, scammers can exploit these features, leaving victims with little recourse.
Example: In 2021, ransomware attacks demanding payments in Bitcoin surged, with one of the most publicized cases being the Colonial Pipeline attack, where hackers demanded a ransom in Bitcoin. These high-profile cases have raised concerns that blockchain is fostering a growing underground economy that exploits its anonymity for illegal activities.
So, Will Blockchain Survive?
I don’t claim to predict the future with certainty, and of course, our collective choices will play a significant role in shaping it. But looking back, there’s little evidence of humans choosing a more complex path when a simpler alternative is available. If blockchain can find a way to simplify, reduce environmental costs, and enhance real-life value, perhaps it can integrate more deeply into our lives. Until then, the promise of blockchain may remain as elusive as it is intriguing.