What are the Limitations of Blockchain?

Blockchain technology has revolutionized the way we store and transfer data. The technology is a secure, distributed ledger that enables users to create trustless applications without intermediaries. By utilizing cryptographic techniques, blockchain provides an immutable and tamper-proof record of transactions that anyone with access to the network can view. However, despite its many advantages, some limitations to blockchain technology should be considered before implementing it in any application or system.

Overview of Blockchain technology

Blockchain technology has become increasingly popular in recent years. Quite simply, a blockchain is an unalterable ledger of digital information that is often used to provide financial records and secure online transactions. Blockchain technology uses cryptography and distributed ledgers to save data in multiple locations, making it virtually impossible for hackers to access or tamper with the data, making it more secure than the traditional banking system.

The decentralization of the data makes it fast, easy, and highly transparent to track and execute complex transactions, including contracts and transfers of assets between persons or other entities. With the rise of cryptocurrencies like Bitcoin, blockchain technology has been embraced by even the largest financial institutions as the new standard for how consumers, companies, banks, and others can securely transfer funds and exchange contracts.

As companies leverage this powerful technology more widely in coming years, its many benefits will be further revealed – from increased security measures to maximizing cost savings.

Limitations of blockchain

Despite its many advantages, blockchain technology faces some inherent limitations. 


Scalability is one of the most significant limitations of blockchain technology. The current blockchain architecture is built on decentralized networks and has difficulty processing large volumes of transactions in a short period of time. This can be problematic for applications or commercial uses that require fast speeds and high throughput. For example, Bitcoin’s blockchain currently has a maximum throughput of about 7 transactions per second, much lower than the traditional banking industry’s 1700 transactions per second, and a peak TPS of about 24,000. Additionally, proof-of-Work (PoW) blockchains require extensive energy resources to secure and validate the distributed ledger due to their decentralized nature. This can be a significant burden on infrastructure costs and the environmental impact.

Other blockchain platforms, such as Hyperledger and Ethereum, have proposed various solutions to address scalability issues, such as sharding, state channels, and off-chain transactions. However, these potential solutions are not yet extensively tested or implemented in production networks. Therefore, the scalability of blockchain technology remains a challenge that must be addressed to achieve mainstream adoption.


As the popularity of blockchain grows, so does the cost associated with running it – primarily through energy consumption due to the intensive computing power needed to keep it secure and functioning properly.

To ensure reliability and security, some blockchain networks (PoW) must be powered by expensive computers that consume large amounts of electricity. This can lead to significant overhead costs for companies or individuals who are looking to implement this technology in their operations. For example, Bitcoin’s network currently requires a total hash rate of around 115 Exahash/sec to maintain its ledger. At current prices, this translates to the energy consumption of over 40 Terawatt-hours per year ­– enough energy to power the entire nation of Denmark. There is also the added cost of hardware and software that is needed to set up and maintain a blockchain network.

Also, the transaction fees associated with blockchain networks can be quite high due to their decentralized nature. As more users join the network, there is an increased network activity and demand for resources that drive up costs due to congestion. This was one of the problems faced by Ethereum, which led to the migration of the network from PoW to the Proof-of-Stake consensus mechanism. Therefore, while there are potential cost savings from using blockchain technology in certain applications, it may not be the most cost-effective solution for all use cases.

Privacy & Security

Although a secure and immutable ledger, blockchain technology is not completely safe from attack. With recent advancements in quantum computing, it is becoming increasingly possible for malicious actors to break down cryptographic algorithms used by blockchains and access sensitive data

For example, the infamous 51% attack can allow attackers to take control of a blockchain network and double-spend coins. Furthermore, due to its public nature, the blockchain’s ledger can be accessed by anyone with an internet connection, making it vulnerable to potential data malicious activities.

It is also important to note that while blockchain technology can increase transparency and trust between parties, it can also lead to privacy concerns. As all transactions are visible in the distributed ledger, users may be reluctant to share sensitive information on a public platform or have people spy on their transactions and wallet balance without prior consent.

Regulation & Compliance Risks

Regulation and compliance risks are major limitations of blockchain technology. Since the technology is largely unregulated and decentralized, there is no centralized authority to enforce user behavior or verify identity information. This means that users can remain anonymous when interacting with blockchain networks, making it difficult for governments to monitor activities on the platform and ensure that users are complying with local regulations.

Furthermore, different jurisdictions have different laws and regulations that must be followed when using blockchain technology. For instance, the European Union’s General Data Protection Regulation (GDPR) requires all organizations to protect their citizens’ personal data. However, since all transactions on a public blockchain are publicly visible, this can conflict with GDPR as it would be difficult to ensure the privacy of users’ data.

Moreover, blockchain technology has yet to be adopted by large financial institutions such as banks and other regulatory bodies due to its lack of oversight and compliance with established laws. This can create a barrier for businesses using blockchain-based solutions in regulated industries.

However, there is potential for increased regulation in the future as governments become more aware of the benefits and limitations of blockchain technology. For instance, several nations have already started drafting laws that regulate cryptocurrencies and other blockchain technology applications. This could lead to greater transparency and trust between users and more opportunities for businesses to use blockchain technology in regulated industries.

Lack of Interoperability

Different blockchains have varying protocols, algorithms, and data structures, making it hard to move information between them and limiting their effectiveness as a universal platform for transactions. Blockchains, such as Bitcoin and Ethereum, cannot communicate with each other or exchange data in a meaningful way. The inability to easily transfer data between networks can be a huge obstacle for any business or organization looking to use blockchain technology for complex applications.

Bitcoin and Ethereum use completely different programming languages for their respective smart contracts. This means that developers must be proficient in both languages to build applications that are compatible with both networks.

In addition, the lack of interoperability between blockchains can lead to high transaction fees as users must pay for the resources needed to move data from one network to another. This makes it difficult and expensive for businesses to create applications that span multiple networks, limiting the potential success of blockchain technology.

To address this limitation, there have been several initiatives in recent years to create protocols that enable data transfer between different blockchains. These initiatives are still in the early stages. Nonetheless, interoperability remains one of the biggest challenges facing blockchain technology today.


Overall, blockchain technology has many potential benefits and applications. However, it is not without its limitations. From scalability issues to a lack of interoperability between networks, these challenges must be addressed for the technology to reach its full potential.

Despite these challenges, several initiatives still seek to improve the capabilities of blockchain platforms and make them more accessible for businesses looking to use them as part of their operations. With continued research and development, we may one day see a future where blockchain-based solutions can revolutionize how organizations operate across industries worldwide.


What is the main purpose of blockchain?

The primary purpose of blockchain is to securely store and transfer data in a distributed, immutable manner. It provides users with an added layer of security through its decentralized nature, allowing data to be stored on multiple servers while preventing malicious actors from tampering with or accessing sensitive information.

What are the 4 types of blockchain?

There are four main types of blockchain technology: public, private, consortium, and hybrid.

What is blockchain about?

Blockchain is a revolutionary digital technology that enables secure, decentralized, and immutable data storage and transfer. It is a distributed ledger system consisting of interconnected computers or “nodes” that maintain an ever-growing list of records known as “blocks.”

What is the limitation of blockchain in the supply chain?

One of the primary limitations of using blockchain technology in the supply chain is scalability. As technology has become increasingly popular, it has struggled to keep up with transaction demands.

What are the challenges of blockchain?

Blockchain remains an emerging technology and faces several challenges before it can be widely adopted. These include scalability issues, high energy consumption requirements, immutability concerns, and the cost of implementation.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Alden Baldwin

Journalist, Writer, Editor, Researcher, and Strategic Media Manager:With over 10 years of experience in the digital, print and public relations industries, he has been working with the mantra, Creativity, Quality and Punctuality. In his waning years promises to build a a self sustaining institute that provides free education. He is working towards funding his own startup.As a technical and language editor, he has worked with multiple top cryptocurrency publications such as DailyCoin, Inside Bitcoins, Urbanlink Magazine, Crypto Unit News and several others.He has edited over 50,000+ articles, journals, scripts, copies, sales campaign headlines, biographies, newsletters, cover letters, product descriptions, landing pages, business plans, SOPs, e-books, and several other kinds of content.

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