Despite the hype building around blockchain, the industry has several major hurdles to overcome to achieve mass adoption. When we speak about blockchain adoption challenges, we often think about the practical use cases for blockchain and decentralized technologies. However, blockchain adoption relies on multiple external factors beyond the applications Web3 developers create. As with any new industry, the blockchain industry has various kinks that need ironing out before mass adoption is likely to take place. Nonetheless, the Web3 community is working around the clock to bring decentralized technologies to the masses.
In this article, we’re going to explore the biggest adoption challenges present in 2022. We’ll look at some of the greatest concerns for businesses looking to integrate Web3. Also, we’ll discuss the various obstacles the industry must overcome to achieve mass adoption and some of the practical solutions available for achieving this. Additionally, we’ll dispel some of the common misconceptions that hinder the adoption of blockchain and Web3.
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Blockchain Adoption Challenges in 2022
Blockchain technology is becoming increasingly prominent sector-wide. However, there are several blockchain adoption challenges slowing down the Web3 movement. As with any new technology, blockchain has experienced several teething issues in the past. Nonetheless, the industry is constantly evolving and adapting to address and overcome these challenges. Below, we take a look at some of the most-pressing blockchain adoption challenges in 2022.
Cryptocurrencies provide an element of anonymity when transacting, as public blockchain networks do not require users to disclose their identities. As such, cryptocurrencies are widely used to fund crime. From human trafficking to terrorism and black markets, cryptocurrencies are essential tools for criminals seeking to make money outside of the traditional financial system.
The sensationalist reports from media outlets claiming that Bitcoin and other crypto assets are only used for crime are often inflated and exaggerated. Nonetheless, the perception that cryptocurrencies are tools for aiding crime is one that threatens to undermine the reputation of the entire industry.
One of the biggest blockchain adoption challenges in 2022 is the way in which blockchain technology is designed. Despite the many advancements in the field, code errors and loopholes are commonplace among emerging decentralized applications (dapps). Bitcoin is the number-one cryptocurrency by market capitalization. Nonetheless, the underlying technology powering the Bitcoin network is slow and cumbersome.
Ethereum and other smart contract blockchains aim to solve some of the perceived issues with the Bitcoin network by increasing speed, throughput, and composability. However, few blockchain networks and dapps are completely bug-free. Even the most-used blockchains and dapps have fallen victim to loopholes and exploits that put user funds at risk and threaten the perceived legitimacy of the industry.
Scalability is one of the most prominent blockchain adoption challenges in 2022. For Web3 to truly become mainstream, blockchains need to scale to meet growing demand. As blockchain networks grow and process more transactions, they often become slow and expensive to use. Some blockchain networks rely on layer-2 solutions to take computations off the main chain and reduce congestion.
However, even the most-prominent blockchains have a long way to go before they can compete with the likes of Visa. For example, Visa can process around 65,000 transactions per second (TPS). Meanwhile, Bitcoin has a throughput of around seven TPS and Ethereum around 13 TPS.
Another significant blockchain challenge is the amount of energy it takes to power decentralized networks. The Proof-of-Work (PoW) consensus algorithm is one of the most popular among public blockchain networks. However, PoW mining is extremely energy intensive. In fact, the Bitcoin network uses roughly the same amount of energy as a county like Sweden or Argentina.
PoW mining requires miners to compete against each other to solve complex math puzzles. The miner who solves the puzzle first earns the right to add a transaction to their block and earn the relevant rewards. Furthermore, as blockchain networks grow, they tend to require more computational power. As such, energy usage is one of the biggest hurdles to blockchain adoption in 2022.
There is a common misconception that blockchain and cryptocurrencies facilitate anonymity. Although there are services available that can successfully hide a user’s wallet address, these platforms are illegal in many countries. The reality is that most cryptocurrencies and blockchain networks are not as private and anonymous as many believe them to be. In fact, public blockchains provide an immutable timeline of transactions and corresponding wallet addresses that make it easy for anyone to trace on-chain activity.
When it comes to the enterprise adoption of blockchain, privacy is often a concern. Any business that uses sensitive data may find blockchain adoption challenging if it requires them to store data on a public ledger. Nonetheless, private and permissioned blockchains exist to address these issues and enable businesses to use distributed ledgers with various restrictions on data access.
Blockchian and crypto regulations are notoriously slow at catching up with the innovations in the Web3 space. Although regulators are moving quickly to accommodate these advances, there are several regulatory gray areas that need addressing. The adoption of blockchain technology relies on a robust regulatory framework that makes it easy for businesses to remain compliant.
Furthermore, regulations will need to cater to the needs of specific countries and regions. One of the biggest challenges regulators face is knitting together local and international crypto laws. As such, what works in one geography may be completely unsuitable for another.
Another challenge for any company looking to integrate blockchain technology is a lack of education and knowledge around the subject. Integrating blockchain requires skilled employees who know how to operate such technologies. Web3 specialists are in short supply, meaning there is substantial competition between companies seeking new hires to fill blockchain roles. Also, blockchain specialists often demand a high salary, meaning it can be expensive for companies to hire large teams of blockchain developers.
Remedies to Blockchain Adoption Challenges – Crime
Now that we’ve covered some of the most pressing blockchain adoption challenges, let’s look at some of the best ways the industry can overcome them. Firstly, we’ll address the issue of crime. Since the birth of the dark web, cryptocurrencies have gained a reputation for facilitating crime. Though it cannot be disputed that cryptocurrencies have become a medium of exchange for illicit activities, the value of these assets pales in comparison to that of fiat currencies. The vast majority of all crime in recent history has been funded by fiat currencies. Criminals will use whatever tools are at their disposal, and if a criminal uses a wrench, we don’t vilify the wrench or ban the use of wrenches.
Design and Accessibility
One of the other prominent blockchain adoption challenges for businesses is the technical barrier to entry. It can be incredibly challenging to create robust decentralized applications (dapps) and blockchain networks from scratch. However, technological advancements in the blockchain industry are taking place at a rapid pace.
These days, you don’t need to create everything from scratch. For example, using Moralis, you can build a Web3 app in no time using just a few lines of code. Plus, Moralis takes care of all the backend coding so that you can concentrate on creating amazing user experiences. Creating robust, powerful dapps is now easier than ever, thanks to industry-leading Web3 tools like the Moralis Web3 API.
Scaling and Energy Consumption
The Bitcoin network inherits much of its security from having a low transaction throughput. However, most second and third-generation blockchains and blockchain projects recognize that scaling and energy consumption are among the biggest blockchain adoption challenges to date. Accordingly, many newer blockchain projects opt for consensus mechanisms that are less computationally intensive than Proof-of-Work (PoW) mining. Instead, Proof-of-Stake (PoS) is fast becoming the go-to consensus mechanism.
PoS consensus requires much less energy than PoW. As such, many PoS chains can scale more efficiently without compromising on security or decentralization. Sustainability is a core component of the Web3 landscape. Also, many projects are looking for new ways to improve the sustainability of PoW mining by using surplus energy from things like gas flaring.
Public blockchains are not always practical for enterprise use. That said, a number of private and hybrid blockchains exist that cater specifically to enterprise needs. Some permissioned blockchains have gatekeepers who allocate permissions. Also, some hybrid blockchains combine elements of both public and private blockchains for optimal security and customizability.
Whether you use a public, private, or hybrid blockchain model, there are plenty of options to choose from. However, there are many misconceptions about public blockchains and how private the data is that we store on them. When we store data on public blockchains, it doesn’t necessarily mean that anyone can view that data. Blockchains use something called “zero-knowledge proofs” that enable network participants to verify that data exists without actually disclosing the data.
Despite the regulatory uncertainty in the blockchain industry, many prominent Web3 companies are working with regulators to make it easier for businesses to integrate Web3 technologies in a compliant manner. Also, regulators appear to be reacting to a shift in sentiment around cryptocurrencies by developing multiple frameworks to lay the foundations of international crypto and blockchain laws.
Though there is still much work to be done, regulations like know-your-customer (KYC) and anti-money laundering (AML) laws are common practices throughout the industry. In the near future, we can expect to see more regulatory clarity throughout the Web3 world.
Although blockchain developers are in extremely high demand, there have never been so many high-quality educational resources available to help people become blockchain certified. For example, Moralis Academy provides courses covering every area of the industry. With Moralis Academy, you can learn at your own pace, regardless of previous experience. What’s more, you’ll be joining a community of over 60,000 like-minded individuals, all striving towards a career in Web3!
Blockchain Adoption Challenges – Summary
The blockchain industry has already come a long way in terms of mainstream adoption and utility. A technology that once seemed like a novelty is now disrupting multi-billion dollar industries and optimizing business processes sector-wide. However, there are still several blockchain adoption challenges that need to be resolved before it becomes integrated into our daily lives.
That said, there are now more tools and services available to assist in blockchain adoption and Web3 integration than ever before. Building decentralized applications (dapps) is becoming extremely accessible. Web3-as-a-Service platforms like Moralis significantly lower the barrier to entry for Web3 development and help you to save time and resources while getting your product to market quickly.
If you’re one of the many business leaders looking to venture into the world of Web3 but don’t know how, Moralis has you covered. Moralis allows you to create next-generation Web3 apps quickly without getting bogged down in all the backend development. Using just a few lines of code, you can integrate Web3 into your website or web app. What’s more, Moralis allows you to integrate Web3 functionality using common Web2 tooling.