Scalability Challenges: Scalability is another likely issue and a hurdle for many blockchain applications. For instance, let’s compare the largest centralized payments system i.e. Visa, and the largest crypto payments system i.e Bitcoin. If Visa can process 65,000 transactions per second, Bitcoin’s maximum speed is 7 transactions per second. In the case of centralized architecture, it’s the controlling authority that decides the flow, it does not unnecessarily notify other peers about a transaction. This saves time and speed. In the case of blockchain architecture, the validation takes several minutes because a majority of nodes have to authorize the transaction. Bitcoin works on the Proof-of-Work model which is secure but slow at the same time. There is an 11 alternative in the form of Proof-of-Stake, which is faster in validating entries but is not regarded as an ideal option for distributed consensus protocol.
The 51% Attack: A 51% attack is a malicious miner or a group of miners taking control of more than 50% of a network’s mining power or hash rate. The miner (or most likely a group of miners) having control of over 50% of the network’s hash can block the history produced by the rest of the network and can even define a new canonical transaction history. Since greater computation power leads to the quicker generation of the blocks, genuine nodes would not be able to compete for a fair version of the blockchain as nodes would only believe the longest version.
High Energy Consumption: It is estimated that the mining of 1 bitcoin needs energy equivalent to 2 years consumption of a typical US household. It is also estimated that energy consumption for each bitcoin transaction is equivalent to 80,000X of energy consumption of a credit card processing. Energy consumption remains one of the biggest issues with miners. The energy is mainly fed to keep the entire network alive all the time. That’s just one blockchain, imagine the case if we have many more such networks.
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