Limitations of Blockchain Technology


Limitations and Emerging Concepts of Blockchain Technology

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December 1, 2020

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Blockchain can be described as the digital ledger that was developed to be able to record various transactions online on a network. Blockchain has been growing in popularity and is common among businesses and companies, which they have always shown interest in developing technology. As much as blockchain has been efficient and reliable in terms of costs, streamlined operations, and speed, blockchain also has several challenges and limitations associated with it as a technology. These challenges range from reputation challenges and organizational challenges to technical difficulties. In recent years there are also new concepts that have come up in regards to blockchain technology. In this paper, we will discuss the limitations of blockchain and the possible solutions. We shall also cover the emerging concepts of blockchain technology.

Limitations of Blockchain

  • The Image Problem

Blockchain has been mostly associated with digital currencies or cryptocurrencies such as Bitcoin. In many instances, online digital currencies have been linked to illegal activities. The black market has been related to operating by the digital currencies and other criminal activities that are said to be facilitated by cryptocurrencies. The negative and lousy image of cryptocurrencies has been linked to being reflective on the blockchain technology, which has also tarnished the appearance and outlook of blockchain technology negatively (Ali, Ally, Clutterbuck, & Dwivedi, 2020). Such a negative view on the blockchain has made the companies and industries shy away from adopting the blockchain technology in their operations mostly because of the disruptive feature of blockchain and the fear of losing their business value and negative market image blockchain. So as to change an outlook on blockchain technology, there would be a need to educate the companies and individuals to understand better the blockchain and the opportunities brought about by the blockchain technology, and the changes that will be there once there are positive implementations to the technology.

  • Regulations and vested interest of incumbent parties

The current regulations on blockchain technology have been tremendously negatively impacting blockchain technology since the regulations are more inclined to favor the incumbents with their vested interests. Mostly the governments and authorities have been imposing such heavy regulations because of their need to protect their citizens and the consumers (Andoni, et al., 2019). Blockchain has been regulatory affected because the technology imposes a new set of challenges to the regulators on how to manage and regulate such a technology and the changes that it brings. The possible solution for this challenge is by showing the governments and other authorities the benefits of blockchain technology so they can create a model for regulation that encourages innovations and at the same time protects the citizens and the consumers.

  • Lack of scalability

This limitation has mostly risen because blockchain technology is still an immature technology. For public blockchains, the adoption process has been dramatically affected by the network’s technical scalability. For example, with the two leading blockchain network, Ethereum and blockchain are quite behind in the speed of transactions. In contrast, Ethereum can manage to process twenty transactions in a second, while the bitcoin blockchain can only handle approximately three to seven transactions (Hughes, et al., 2019). There various and several upcoming possible solutions to mitigate the scalability limitation. One solution is to add a second layer on the primary blockchain network so that it can increase the speed of the transactions; this solution has mostly consisted of the Lighting Network.

  • The lack of blockchain developers

There is a shortage of blockchain developers who are efficient, well trained, and skills for developing and managing the blockchain technology network. There has increased demand for qualified and proficient blockchain personnel, and the acute shortage of skilled people has proven to be a challenge (Janssen, Weerakkody, Ismagilova, Sivarajah, & Irani, 2020). Research has shown that blockchain-related jobs have increased by almost 2000% just from 2017 to 2020, and the primary concern is to have sufficient availability of qualified developers. Since blockchain technology is still developing and evolving, the possible solution is for the developers’ community to adopt the technology and accommodate it. Another possible solution is for educational institutions to introduce blockchain courses.

  • Blockchain technology can be very cumbersome and slow.

Blockchain technology is quite complex in its encryption and distributive nature, and this can bring about the blockchain to be cumbersome and slow. Sometimes the transaction on the blockchain system takes time to process compared to the traditional modes of payments such as cash, debit, and credit cards. In the blockchain, mostly when there is immense traffic in the network, the transactions take longer to be processed to the extent of even taking days for the whole transaction to be completed (Min, 2019). When the transaction takes a longer time to be processed, the cost for operating the transactions becomes higher and expensive than usual, and such a challenging feature also prevents the network from accommodating more users. Theoretically, the principle is extended to the blockchain system used for something different from the store value, for example, interactions in the IoT environment or logging transactions. The possible solution for such limitations is in the advancement of engineering and the processing speeds.

Emerging concepts for blockchain technology

  • Blockchain for product tracing

Blockchain has been identified to be the best reliable in tracking activities. In the healthcare industry, the blockchain-based application was proposed to reduce fraud cases in prescriptions of drugs or medicines, creating a connection with the dental sector and form integration with the medical information. Other commercial blockchain IoT solutions have been deployed into the market, for example, the IBM blockchain IoT which has made the transactions in the blockchain trustable. Another example is RAIN RFID IoT, a tracking service that has significantly enabled tracking in both in-store and supply chains (Reyna, Martín, Chen, Soler, & Díaz, 2018). Blockchain has also grown popular in bringing about anti-counterfeit solutions in the authentication and verification of products in the blockchain network and all other markets involved with electronic commerce.

  • Blockchains for public services

Blockchain technology has been adopting autonomous credit systems, which has increased the potential performance that the blockchain can make for online trading. The autonomous blockchain technology is perceived as the next big thing for the credit system because it is trading oriented and matches all the trading related users. It has been created to be a traceable, dynamic, integrative, and blockchain ecosystem (Tandon, Dhir, Islam, & Mäntymäki, 2020). The concept is to make all users’ transactions credible other than just credible data in the blockchain technology. The concept supports and accommodates creditworthy business commitments. There is no dependency on any credit brokerages, but with multimedia and life cycle tracing information.

  • Blockchain for supply chains

Blockchain has become more appropriate and convenient for the supply chain because there is a need for a creditworthy mechanism in the multiple entities in the supply chain to cooperate for the organization. To avoid and to prevent cheating and fraud in the supply chain, blockchain technology must be developed to provide creditworthiness and security for completing information within the supply chain participants. Cooperative projects with industry partners have the blockchain project designed to increase the reliability and efficiency of financial auditing and enhance economic challenges for small enterprises and businesses (Tönnissen & Teuteberg, 2020). Blockchain has considerable potential for smart contracts to bring about more trustable and secure corroborative companies within the supply chain. The smart contracts in the blockchain system are adopted to compose the transaction process and execute automatically in a more cost-friendly, secure, and transparent manner. For example, to regulate the cross-enterprise collaborations in socialized manufacturing resources, a blockchain-based production credit mechanism (PCM) is used.

  • VC funds will flow to blockchain startups.

Venture funds have been tremendously noticing enterprise interest in blockchain technology, which has to be more focused on back startups helping the banks with their study and research. VCs find opportunities for startups to collaborate with institutions and provide incidental periphery for the blockchain APIs and in ID verification services. Such a concept will bring more investors to blockchain technology (Wang, Singgih, Wang, & Rit, 2019). VC investment in blockchain is estimated to exceed $2.5bn, and this is not inclusive of what the banks will spend on their operating budgets. The startups should not assume a windfall even with the caveat just because they deal with blockchain.

  • Blockchain for cryptocurrency and payment

Acknowledgeable it Bitcoin that brought acceptance and prosperity to the blockchain technology, mostly because blockchain provides entirely secure, decentralized, and transparent transactions for Bitcoin. Currently, there have been more Bitcoin-like projects and technologies that have been developed and launched. Most blockchain concepts are being developed based on the Bitcoin blockchain (Yaeger & Costa, 2019). Recently the Libra by Facebook and the DCEP by the Central Bank of China, which are influential projects, announce to be launched. Both of the projects aims at providing digital wallets without the need for bank accounts and create a new electronic infrastructure all over the Globe. Contrary to the autonomous Bitcoin system, the two projects have been developed with significant resources, which is undoubtedly a catalyst for the blockchain technology and application, which are revolutionizing the world.


In conclusion, since it is faced with particular challenges and limitations, it is still growing and developing, implementing the technology much more efficiently. The emerging concepts bring about the acceptability of blockchain technology and increasing its applications. Blockchain is growing more in popularity and uses mostly in the cooperate sector. More educational institutions have introduced blockchain technology-based courses that will eventually solve the challenge of inadequate availability of qualified developers for blockchain. Blockchain technology has proven to be advantageous, and this realization by governments have made them create regulations that are accommodative of blockchain technology.





Ali, O., Ally, M., Clutterbuck, & Dwivedi, Y. (2020). The state of play of blockchain technology in the financial services sector: A systematic literature review. International Journal of Information Management, 54.

Andoni, M., Robu, V., Flynn, D., Abram, S., Geach, D., Jenkins, D., . . . Peacock, A. (2019). Blockchain technology in the energy sector: A systematic review of challenges and opportunities. Renewable and Sustainable Energy Reviews, 100, 143-174.

Hughes, L., K.Dwivedi, Y., K.Misra, S., P.Rana, N., Raghavan, V., & Akella, V. (2019). Blockchain research, practice and policy: Applications, benefits, limitations, emerging research themes and research agenda. International Journal of Information Management, 49, 114-129.

Janssen, M., Weerakkody, V., Ismagilova, E., Sivarajah, U., & Irani, Z. (2020). A framework for analysing blockchain technology adoption: Integrating institutional, market and technical factors. International Journal of Information Management, 50, 302-309.

Min, H. (2019). Blockchain technology for enhancing supply chain resilience. Business Horizons, 62(1), 35-45.

Reyna, A., Martín, C., Chen, J., Soler, E., & Díaz, M. (2018). On blockchain and its integration with IoT. Challenges and opportunities. Future Generation Computer Systems, 88, 17.

Tandon, A., Dhir, A., Islam, A. N., & Mäntymäki, M. (2020). Blockchain in healthcare: A systematic literature review, synthesizing framework and future research agenda. Computers in Industry, 122.

Tönnissen, S., & Teuteberg, F. (2020). Analysing the impact of blockchain-technology for operations and supply chain management: An explanatory model drawn from multiple case studies. International Journal of Information Management, 52.

Wang, Y., Singgih, M., Wang, J., & Rit, M. (2019). Making sense of blockchain technology: How will it transform supply chains? International Journal of Production Economics, 211, 221-236.

Yaeger, K. M., & Costa, A. (2019). Emerging Blockchain Technology Solutions for Modern Healthcare Infrastructure. Journal of Scientific Innovation in Medicine, 2(1).


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