It’s easy to see blockchain technology as a revolutionary invention that will change thousands of industries. Yes, blockchain technology has the potential to do amazing things – but there are some things blockchain can’t do.
Blockchain technology has certain inherent limitations. Some of these limitations – like scaling – can be solved through innovation. Other limitations – like the need for increasing data storage – may never be solved.
Catherine Tucker and Christian Catalini recently explored the issue in an article for the Harvard Business Review.
“Blockchain technology has the potential to do amazing things,” explained the authors. “It can provide an immutable, digital audit trail of transactions, and can be used to cheaply verify the integrity of data. It can help businesses and individuals agree, on a global scale, about the true state of affairs within a market without relying on a costly intermediary.”
“However, when assessing blockchain business models, it is useful to understand what blockchain can’t do.”
What are the limitations of blockchain technology? What can’t blockchain do? Keep reading to find some examples.
Blockchain Can’t Reliably Track Babies In A Hospital Ward
Tucker and Catalini discuss how blockchain technology could be used to track babies within a hospital ward. Babies have been mixed up at hospital wards before, and the consequences of a baby being mistaken for another baby can be horrendous. Blockchain technology could be used to record a baby’s current location in an immutable, verifiable way.
That all sounds great – but there are crucial problems with using blockchain to solve a problem like this. The blockchain is immutable, but the link between the baby and the blockchain is not immutable:
“The digital records may be immutable and verifiable, but how does someone know which digital record is attached to which baby? To link an entry on the blockchain to an actual, real-life baby, we need to give the baby a physical identifier through a physical tag, or in a more futuristic world, a small chip or digital genome record that links the baby to its digital record. And this is where blockchain falls down. It can’t help with this process, and can’t verify that perhaps the most important step of verification is happening correctly.”
Tucker and Catalini describe this as the “last mile” problem. Blockchain platforms are struggling to bridge the gap between a physical product and a digital entry for that product on the blockchain.
Sure, you can easily attach a QR code or an NFC tag to an item, and then connect that to an entry on the blockchain. But how do you prevent someone from slapping the same QR code on a separate product? How do you ensure the tag remains attached to the item at all times?
Blockchain Can’t Verify “Humanness”
Tucker and Catalini also discuss how blockchain technology has shortcomings when it comes to advertising. Namely, blockchain technology can be used to make digital advertising more efficient, but there’s still a gap between the user and the blockchain, and modern blockchains have no way to bridge that gap.
“Within marketing, one issue that often comes up is that a pair of eyeballs that an advertiser is paying for may not actually belong to the person they’re supposed to. The advertiser might think they’re paying to show an ad to a mid-thirties male in the market for a Lamborghini, but the ad might actually be shown to a minivan-driving academic who has no intention of buying another car for kids to wreck but who likes to dream. Or, even worse, the ad could be being viewed by a bot.”
“Blockchain technology can track which digital identifiers are associated with the viewing of an ad,” the article goes on to explain, “but it cannot help with verifying humanness or the honesty of a buyer’s intentions. Verifying who’s actually behind the digital identifier requires offline verification. Verifying the honesty of apparent buying intentions is perhaps beyond any technology we possess today.”
In other words, there’s a certain human element to many processes – including marketing processes.
Every Early Stage Technology Has Problems, And Blockchain Is No Exception
None of the above should be taken as a reason blockchain will fail. Instead, all of the above are solvable problems. Every new technology has problems. Sometimes, these problems are conquered. In other cases, the problems are circumvented.
Blockchain technology is ten years old. It still has plenty of room to grow – and the next stage of blockchain technology’s development could be the most exciting.