Many businesses are currently experimenting with blockchain, and many have implemented a decentralized solution. According to Deloitte’s 2020 Enterprise Blockchain Adoption Report, 55% of 1,500 executives surveyed said the technology had become a critical priority. However, only 39% have actually initiated a blockchain deployment.

As blockchain gains traction and acceptance across various industries, several challenges must be addressed before large-scale adoption becomes a reality. Here are seven key blockchain issues that need resolution:

1. Scalability

The first problem is the technical scalability of the blockchain, which, at least for public networks, is an obstacle that can limit their adoption. For example, the growing Bitcoin blockchain and the Ethereum full archive node require nodes that validate transactions to download the entire chain, which can be a problem in the long term.

Of course, there are plenty of other blockchains that take a different approach and may require less storage space. However, the growth of data volumes—175 zettabytes per year in 2025—could be a problem.

Scalability is less of an issue for private blockchains like Hyperledger, as nodes in the network have a direct interest in processing transactions. This means that the computing power needed to validate blocks is not an issue. If transactions cannot be verified in real time or in a short time, this affects the technical implementation of the blockchain, as fast solutions are often needed, especially in today's high-speed environments.

2. Transaction Speed

The second issue is the speed of blockchain transactions. In 2021, the Bitcoin blockchain is still only capable of processing seven transactions per second, while the Ethereum blockchain can theoretically handle eight. However, during Singles Day 2018 in China, Alibaba processed 325,000 transactions per second, resulting in $30.8 billion in revenue in 24 hours.

It will take time for the blockchain to reach these levels. In the meantime, new distributed ledger technologies are being developed that offer thousands or even millions of transactions every second. However, the adoption of these new distributed ledger technologies in enterprise environments is still limited.

3. Decentralization

The third issue is the level of decentralization with the Bitcoin blockchain. While this is not true of all distributed ledger technologies, it is important to highlight. The strength of Bitcoin is that it was designed to be decentralized, and no centralized stakeholder could control the network.

However, the majority of Bitcoin’s collective hash rate remains concentrated within a few mining pools. Currently, six mining pools control over 75% of the total mining power. This centralization of transaction verification is an inherent outcome of Bitcoin’s protocol, which naturally favors economies of scale. While this may not pose an issue if mining pools operate with integrity and have incentives to act ethically, it still raises concerns about decentralization and security.

95% of existing BTC are controlled by whales, 2.4% of wallet addresses.


4. Search for Talent

The fourth challenge from an organizational design perspective is the need for talent to build decentralized applications. Training employees to use blockchain takes time; however, many educational institutions do not yet teach it. Only 50% of the world’s leading universities offer courses in blockchain. As with all new technologies, organizations and academia must work together to ensure that the right curriculum is in place.

5. Ecosystem

The fifth challenge is that a decentralized ecosystem is needed to surround the blockchain and support distributed products and services. This includes decentralized cloud storage, archiving, communications, and domain name servers.

Most of these technologies are not yet fully developed, which creates significant risks for anyone who wants to engage with blockchain and develop fully decentralized and autonomous organizations.

The decentralized ecosystem consists of several layers, many of which are still under development.

Infrastructure Layer: Applications that create an infrastructure layer for development, including Ethereum, EOS, Ripple, and Hyperledger.

Consensus Mechanisms: Used to verify the state of the network and validate transactions, such as Proof of Work (PoW) and Proof of Stake.

Distributed Computing: Examples include Golem and Sonem.

Distributed Storage: Ensures constant access to data, such as Storj and FileCoin.

Privacy and Identity: Focused on self-sovereign identity, including Sovrin and Blockstack.

Monetary Transactions: Currency tokens like Bitcoin, ZCash, and Monero.

Wallets: Used for storing cryptocurrency, including Jaxx, Exodus, and Trezor.

Exchanges: Centralized exchanges (Coinbase, Kraken) and decentralized exchanges (Uniswap, 0x).

Industry Applications: Used for provenance, transparency, and transaction settlements.

6. Energy Consumption

The sixth problem concerns the energy consumption of decentralized networks. Although there are many consensus mechanisms, the Proof of Work consensus mechanism is still the most expensive. PoW requires solving complex puzzles, which demands a huge amount of energy.

The Bitcoin blockchain's PoW consensus mechanism is currently estimated to consume 66.7 terawatt-hours per year, which is comparable to the total energy consumption of the Czech Republic, a country with a population of 10.6 million.

Fortunately, new blockchains can use other consensus mechanisms that require significantly less energy. In recent years, the number of available consensus algorithms has increased dramatically.

Read more : Blockchain Privacy & Scalability

7. Sustainability, Irreversibility, Quantum Computing, and Lack of Standards

There are also issues related to the data in the blockchain. Durability and irreversibility are two key attributes of blockchains: once data or transactions are added and accepted by the network, they can no longer be changed. However, blockchain guarantees authenticity but not reliability and accuracy.

If incorrect data is proposed technically correctly, it will enter the blockchain. Similarly, if a document contains false information but is proposed according to the rules, it will enter the blockchain.

In theory, data on a blockchain will be stored indefinitely, but the development of quantum computing means that today’s cryptography may not be secure in the near future. Poor execution of smart contracts and the resulting poor automated decision-making can lead to significant problems.

While blockchain reduces costs and increases efficiency through a shared ledger and smart contracts, the lack of standards can backfire. Getting global industry standards for blockchain technology is difficult, and it may take time before organizations have a common standard. The International Organization for Standardization is currently working on this.


Final Thoughts

Blockchain is a promising technology, especially when used in conjunction with other technologies. It offers organizations the opportunity to rethink their internal and external processes, eliminate inefficiencies, increase transparency, and build a better organization overall. However, it faces numerous challenges that may impact its adoption in organizations.

Scalability, lack of speed, talent, and standards could slow down both its implementation and the development of new blockchain applications, negatively impacting the growth of decentralized autonomous organizations.

Despite these challenges, dozens of new applications have emerged in almost every industry that employ distributed ledger technologies and are already benefiting from this fundamental technology.