Limitations of Blockchain. What are they?

[jhean_arcane]

Blockchain is a new kind of database - block or records connected to another block. That's the simplest explanation. However, I want to ask the hard question.

What are the limitations of blockchain? I know this is a really good innovation and I highly support it, not because I join the bandwagon, but because bitcoin will not exist if not because of it.... But I want to have a better understanding of the blockchain (in layman's terms please) if I want to get really serious about cryptocurrency and ICOs. My second question is, what are the things experts do to improve blockchain?

[Xynerise]

This is the Bitcoin board so I'll be speaking about the Bitcoin blockchain....

The first and most evident "limitation' of blockchains is scalability.
Public blockchains are very hard to scale especially on-chain.
This is because of the way bitcoin achieves consensus; most nodes must verify a transaction (or block) is valid.
If the block size is too high then a lot of nodes will be cut off and this leaves the power of the network in the hands of a few people which leads to centralisation.
Also, if the block size is too low then obviously a lot of transactions won't be able to fit and this leads to high fees during high thoroughput periods as people will pay more for their transaction to be mined.

[alia]

The blockchain works great for currency systems, and to an extent, smart contracts (provided they are not needlessly complex, or else you risk losing all stored funds to a bug/hack/unintentional loophole). Alas, there are not many other practical uses for the blockchain, owing to the fact that the very premise of the blockchain requires distributed nodes (which usually requires monetary incentive or a token), and it also requires the transparency of data. Now, it's very fun to think of big banks and companies using the blockchain for all of their transaction, but if this was implemented in the real world, the idea falls flat on its face. Why? Because no bank/company in their right mind would reveal all their information publicly, no bank/company in their right mind would let third (or even second) parties control their nodes. They would implement what is commonly known as a private blockchain. A private blockchain is also known as a database.

[BTCerm]

There are many limitation of blockchains like: Complexity, Network size, Transaction costs, network speed, Human error, Unavoidable security flaw and  Politics. It has made cryptography more mainstream, but the highly specialized industry is chock-full of jargon. Thankfully, there are several efforts at providing glossaries and indexes that are thorough and easy to understand.

[edhp]

scalability. if this canbe solved, then crypto will really take off from where it is now

[Random Seller]

Fragmentation.

Blockchain is based on a peer to peer system. So each peer/node have the freedom to choose which “version” of the software to run. This makes it difficult to implement significant changes to the codebase because each peer may have different views on the changes.

As to private chains, I don’t see a point for it. Without the hashpower backing it, it would be the same as a normal database. As is the case with most ICOs.

[nc50lc]

Bitcoin's solid security brought by the cryptography-based (public ledger) system known as the Blockchain have a lot of limitations
but not one of these (bold and colored):

There are many limitation of blockchains like: Complexity, Network size, Transaction costs, network speed, Human error, Unavoidable security flaw and  Politics. It has made cryptography more mainstream, but the highly specialized industry is chock-full of jargon. Thankfully, there are several efforts at providing glossaries and indexes that are thorough and easy to understand.

Seriously, how can an automated public ledger produce human errors? What you wrote were typical human handling errors that are not exclusive and caused by the blockchain.

Anyways, things that I'm noticing are:
[1] The Full Node's increasing file size, the current 145GB+ of Data may be easy to store in any HDD/SSD (not even mentioning the synchronization speed), but somewhere in the future it can grow up to 1TB that can be inaccessible for some.
This can lead to standard full node users to use 3rd party clients, nodes could be exclusively owned by huge groups or companies due to its inaccessible size, might result in less nodes, more centralization.
There are couple of possible solutions to this, in the future, developers might find a solution to this even before the full node reach that level.
Let's say, start by not increasing the block size.

[2] The 51% attack. Today's hashing power might be phenominal, even with the unethical mining system we have now known as pools, a 51% attack is nearly impossible.
But when the 21m BTC supply was mined, miners will surely shift to a more mining-profitable coin that can lead to a lower Hashing power.
With that, one of those huge pools can easily gain more than half of the mining operation, it's up to them whether they use that advantage to help or destroy btc, things will differ depending on our view of digital currencies at that time.

It's easy to assume that new technologies can pave a road to a better future, yes it can, but all had gone to a phase that required us to deal with its own limitations.

[HeRetiK]

Fragmentation.

Blockchain is based on a peer to peer system. So each peer/node have the freedom to choose which “version” of the software to run. This makes it difficult to implement significant changes to the codebase because each peer may have different views on the changes.

I'd argue that this is both a boon and a bane.

Giving nodes the freedom to run different, possibly competing versions of the protocol provides an unprecedented form of autonomy to users. It keeps developers in check to not stray too far from what the users want and enables users to fork off should they perceive the original vision of a blockchain project to be compromised -- which is pretty much what happened with the Bitcoin Cash hardfork.

Of course it makes updates and reaching consensus regarding upgrades difficult, however I'd argue it's a price worth paying for making sure that no single entity gains too much power over a blockchain.

But when the 21m BTC supply was mined, miners will surely shift to a more mining-profitable coin that can lead to a lower Hashing power.

One of the side-effects of the rise of ASICs has been that Bitcoin is sharing its PoW scheme with only a handful of coins, signifcantly reducing the number of possible targets to alternatively point hashing power at. Nonetheless it is of course impossible to predict how the world and cryptocurrencies will look like a 100 years from now, given the latter still exist.

[nullius]

Blockchain is a new kind of database - block or records connected to another block. That's the simplest explanation.

It’s an oversimplified explanation.  The blockchain forms a Merkle chain of unalterable history, whereby correct knowledge of the present can be used to verify correct knowledge of the past.  Adding a Hashcash-style POW function for transaction ordering, it becomes a Byzantine fault-tolerant distributed database with no central authority or trusted “supernodes”.  That’s the simplest explanation I can provide in two sentences.

However, I want to ask the hard question.

What are the limitations of blockchain? I know this is a really good innovation and I highly support it, not because I join the bandwagon, but because bitcoin will not exist if not because of it....

Solving the problem of creating a Byzantine fault-tolerant distributed database with no central authority was a work of genius by Satoshi.  This required design trade-offs; and as a result:  The blockchain may well be the world’s most inefficient database; and it has very limited scalability.  These are not problems, because higher-layer solutions (Lightning Network) can use the blockchain as a foundation.

Thus, yes:

The first and most evident "limitation' of blockchains is scalability.

A trusted database system can always beat a blockchain-style system hands down for performance.  But then, the best currency you could build would be Paypal 2.0.  Whereas Bitcoin is a trustless, permissionless currency which nobody controls.

But I want to have a better understanding of the blockchain (in layman's terms please) if I want to get really serious about cryptocurrency and ICOs.

ICOs are scams, ipso facto.  Avoid.

My second question is, what are the things experts do to improve blockchain?

To improve Bitcoin’s blockchain and the more efficient usage thereof, a few examples are:  Segwit (done), Schnorr signature (in development), MAST (in development).

The blockchain works great for currency systems, and to an extent, smart contracts (provided they are not needlessly complex, or else you risk losing all stored funds to a bug/hack/unintentional loophole).

Aside:  Complexity is not the issue with smart contracts:  Correctness is.  To see some of the advanced research work being done to potentially bring powerful, mathematically provable smart contracts to Bitcoin, read the paper on Simplicity (PDF).

(That’s not on the topic of the blockchain itself; but it’s no secret I despise the centrally controlled exploding clown car amateur show of Ethereum, and I do so look forward to the prospect of things being done right for Bitcoin.)

Alas, there are not many other practical uses for the blockchain, owing to the fact that the very premise of the blockchain requires distributed nodes (which usually requires monetary incentive or a token), and it also requires the transparency of data.

Transparency of data is not required.  Zerocoin (the concept) and Zcash (the existing currency) use zero-knowledge proofs such that all that is revealed is, “a valid transaction occurred in which outputs did not exceed valid inputs”.  There is other work being done to obscure information, such as Confidential Transactions for Bitcoin.

Now, it's very fun to think of big banks and companies using the blockchain for all of their transaction, but if this was implemented in the real world, the idea falls flat on its face. Why? Because no bank/company in their right mind would reveal all their information publicly,

There was a collaboration between JPMorgan and Zcash to produce a zero-knowledge proof implementation for banking use.  The precise reason was that big banks do not want to reveal confidential transaction information to competitors seeking business intelligence.  Note:  I am in no way, shape, or form endorsing JPMorgan’s Quorum, or anything whatsoever to do with JPMorgan, a/k/a Evilbank of Evilbanks.  I am simply relating some interesting facts which pertain to what you said.

no bank/company in their right mind would let third (or even second) parties control their nodes.

This is not a valid concern.  The important part is your node; and nobody controls your node in Bitcoin.

They would implement what is commonly known as a private blockchain. A private blockchain is also known as a database.

A “private blockchain” is also known as a hyped-up dog and pony show based on buzzwords and not engineering.  An ordinary ACID database is inconstestibly superior for 90+% of use cases for so-called “private blockchains”; and for 9+%, there exist other network database solutions which will be far more efficient.  There are only a few corner cases I can imagine even in my wildest fantasies whereby a “private blockchain” might make sense.  Adding a central authority instantly removes some extreme engineering challenges.

A “private blockchain” which amounts to Paypal 2.0 will be slower and costlier than Paypal 1.0.  Why bother?

(Aside:  I mostly disagree with your post, but it was cogent.  Also, it pointed out something I am well aware of, but most Bitcoiners don’t realize:  Big banks and huge corporations do not want to reveal their private info in a global public ledger.  Sure, they want to rape your privacy—but they jealously guard their own.  Thanks for bringing that up.  +1.)

Politics.

Not a limitation of the blockchain.  Rather, a product of corruption at the wetware [human] layer—resulting in intentionally divisive disinformation campaigns.

It has made cryptography more mainstream, but the highly specialized industry is chock-full of jargon.

Any advanced technology will involve jargon incomprehensible to those who have not studied it.  So...?

Fragmentation.

Blockchain is based on a peer to peer system. So each peer/node have the freedom to choose which “version” of the software to run. This makes it difficult to implement significant changes to the codebase because each peer may have different views on the changes.

Interesting angle.  But it is an issue with decentralized P2P systems, not the blockchain per se.

[2] The 51% attack. Today's hashing power might be phenominal, even with the unethical mining system we have now known as pools, a 51% attack is nearly impossible.
But when the 21m BTC supply was mined, miners will surely shift to a more mining-profitable coin that can lead to a lower Hashing power.
With that, one of those huge pools can easily gain more than half of the mining operation, it's up to them whether they use that advantage to help or destroy btc, things will differ depending on our view of digital currencies at that time.

That’s not a limitation of the blockchain per se, but rather, a security limitation of its design for using Hashcash-style POW for transaction ordering.

But when the 21m BTC supply was mined, miners will surely shift to a more mining-profitable coin that can lead to a lower Hashing power.

One of the side-effects of the rise of ASICs has been that Bitcoin is sharing its PoW scheme with only a handful of coins, signifcantly reducing the number of possible targets to alternatively point hashing power at. Nonetheless it is of course impossible to predict how the world and cryptocurrencies will look like a 100 years from now, given the latter still exist.

And this is one facet of a very significant reason to not switch POW algorithms.  Thank you.

[minerjnbe]

  Hello I was able to browse the following list of weakpoints of Blockchain Technology (big thanks, credit goes to the author ROB BLASETTI from his article 5 Weak Points of Blockchain Technology   https://blockgeeks.com/public-blockchain/ );

 :)1. There is no customer protection on the blockchain.
=> Blockchain technology operates as a push-based settlement system. This means the individual holds power over the resource they want to verify on the blockchain. This could be cryptocurrency, certificate authentication, land titles, etc. The problem with this is if a transaction goes sour after it has already been verified on the blockchain, the only feasible way of returning the transaction is if the parties agree to reverse it. Using a centralized system like a bank. However, there is a procedure in place to be able to dispute trades after they are complete.
     Some trade technologies that settle on a blockchain have used an arbiter system to fix this problem, an example of this is the Open Bazaar P2P trade network. This way a trade occurs between two people, and one impartial moderator.

 :)2. Settlement on a blockchain is slow.
=> A cost of settling a transaction on the blockchain is that all the nodes in the network need to come to an agreement that the transaction is valid. This is a far slower process than having a bank verify your transaction in an instant.
     Transactions can be made instantaneously, however until the block in which the transaction is inserted in has been verified, it is classified is untrustworthy. In the time between a lodged transaction is made and when the block settles, a bad actor could launch fraudulent transactions to trick the network into what is known as a double-spend.
     A very exciting upcoming technology that could solve this problem is the lightning network. This solution acts as a layer 2 of blockchain technology; it can be applied to any public blockchain. It will enable instantly verified transactions for a fraction of the cost of today’s settlement.

 :)3. Miners can be selfish
=> The mining process on the blockchain is an innovation which uses game theory economics to incentivise people to commit computer power for securing the network for a profit. The down-side of this is generally miners won’t care about settling as many transactions as possible; they will make the most money by finding and verifying a block in the fastest way possible.
     This leads to a problem of miners finding empty blocks and validating. There is also another problem known as Selfish Mining, which is a situation where a miner or mining pool finds and validates a block and does not publish and distribute a valid solution to the rest of the network.

 :)4. The growing blockchain size
=> With every new block, a blockchain grows. This can be an issue because each node that is validating the network needs to store the entire history of the blockchain in order to be a participant. This is a hard enough problem with the bitcoin blockchain where the transaction size is only a few bytes, the total blockchain size as of January 2017 is 98GB. Given that at the same time in 2016 the size was 50GB, and the use of the blockchain is continuing to increase, this is a growing concern.
      One of the biggest debates in the bitcoin space is if the block size should be increased. If a blockchain has bigger blocks the blockchain size will increase faster, thus weeding out the solo miners eventually. This is a big issue because the health of a blockchain network is partially dependent on the amount of nodes in the network, and the spread of those nodes across the world. The counter argument for this issue is that with sufficient advancement of technology hard disk space will be very cheap in the future and will stay ahead of the blockchain size. The debate is ongoing.

 :)5. Eventually settlement on the blockchain will not be cheap
=> On any public blockchain, space in a block is a finite resource. Necessarily as the network is utilized more the amount of transactions that will want to settle in a block will exceed the storage capacity. Public blockchain networks have a solution built in for this which is that transactions with a higher miner fee attached will get precedence to be included in a block. This makes sense because the miners want to maximize their profit so that they will include transactions with the highest fees first.
     This is not a bug, but a feature. If it were free to settle on the blockchain, there would be far too many ways of attacking the blocks with dust transactions and clogging up the network. Originally the bitcoin blockchain had no block size limit; this was eventually set to 1MB to avoid a Sybil Attack on the network.

[HeRetiK]

Blockchain is a new kind of database - block or records connected to another block. That's the simplest explanation.

It’s an oversimplified explanation.  The blockchain forms a Merkle chain of unalterable history, whereby correct knowledge of the present can be used to verify correct knowledge of the past.  Adding a Hashcash-style POW function for transaction ordering, it becomes a Byzantine fault-tolerant distributed database with no central authority or trusted “supernodes”.  That’s the simplest explanation I can provide in two sentences.

Thank you for this post. It's always mildly infuriating how people focus on the boring part of blockchains -- ie. the database aspect -- while completely ignoring the interesting part -- ie. achieving consensus.

Now one may argue about the up and downsides of PoW, but one thing should be clear to everybody -- a blockchain without a decentralized, permissionless, trustless way to reach consensus is only half the fun.

:)1. There is no customer protection on the blockchain.
=> Blockchain technology operates as a push-based settlement system. This means the individual holds power over the resource they want to verify on the blockchain. This could be cryptocurrency, certificate authentication, land titles, etc. The problem with this is if a transaction goes sour after it has already been verified on the blockchain, the only feasible way of returning the transaction is if the parties agree to reverse it. Using a centralized system like a bank. However, there is a procedure in place to be able to dispute trades after they are complete.
     Some trade technologies that settle on a blockchain have used an arbiter system to fix this problem, an example of this is the Open Bazaar P2P trade network. This way a trade occurs between two people, and one impartial moderator.

Customer protection is a legislative responsibility, not a technological one. If you use cash or Bitcoin to pay a law-abiding merchant they will still honor your rights as a customer. If you wire transfer money to a nigerian prince customer protection will do shit for you.

:)2. Settlement on a blockchain is slow.
=> A cost of settling a transaction on the blockchain is that all the nodes in the network need to come to an agreement that the transaction is valid. This is a far slower process than having a bank verify your transaction in an instant.
     Transactions can be made instantaneously, however until the block in which the transaction is inserted in has been verified, it is classified is untrustworthy. In the time between a lodged transaction is made and when the block settles, a bad actor could launch fraudulent transactions to trick the network into what is known as a double-spend.
     A very exciting upcoming technology that could solve this problem is the lightning network. This solution acts as a layer 2 of blockchain technology; it can be applied to any public blockchain. It will enable instantly verified transactions for a fraction of the cost of today’s settlement.

Traditional payment methods may seem instant, but behind the curtain settlement is way slower than Bitcoin's or that of other cryptocurrencies'.

Wire transfer / SEPA transactions can take 1-2 days to settle. Direct debit can take up to 14 days to settle. Credit cards / PayPal can take even longer.

:)3. Miners can be selfish
=> The mining process on the blockchain is an innovation which uses game theory economics to incentivise people to commit computer power for securing the network for a profit. The down-side of this is generally miners won’t care about settling as many transactions as possible; they will make the most money by finding and verifying a block in the fastest way possible.
     This leads to a problem of miners finding empty blocks and validating. There is also another problem known as Selfish Mining, which is a situation where a miner or mining pool finds and validates a block and does not publish and distribute a valid solution to the rest of the network.

Selfish mining is a potential attack on the network but an uneconomical one at that. Unlike mining empty blocks, it has nothing to do with mining incentives being misaligned.

[jhean_arcane]

Thanks for all of your answers! I am enjoying reading your replies and it gives me more realistic understanding about blockchain. At first, I thought that this technology will be the magic bullet to every technological problem. But now, I know that blockchain is not for everyone. But when used correctly according to its purpose and strength, it is indeed a formidable technology. For example, a pen was invented for transcribing and recording data on paper, but it is useless as a chopstick or to stab on something - sure, you can use it as that, but its full potential will not be realized. See the picture? I'm not saying that people should limit the use of blockchain, though. That's why we have developers. 

This is what people should be educated about: the pros and cons of everything, and to have a realistic and healthy expectation about blockchain and cryptocurrency.

[nullius]

Thanks for all of your answers! I am enjoying reading your replies and it gives me more realistic understanding about blockchain. At first, I thought that this technology will be the magic bullet to every technological problem.

Core developer gmaxwell is prophetic.  In one of the earliest posts to which I awarded merit, he wrote of how DHTs...

...get invoked in ignorance to every distributed systems problem because they're the first distributed systems tool people have heard of (sadly, "blockchain" is seems to be stealing this role), much as "neural network" has infested lay understanding of machine learning, or perhaps in other times "XML" was treated as a magical solution for inter-working serialization in places where it made little sense.

There is no such thing as a “magic bullet to every technological problem”.  Unlike DHTs, the blockchain is actually robust and secure (including Sybil-resistant) in the use case for which it is the right tool for the job.  The blockchain is a work of genius.  But it is still only the right tool for the right job.

Don’t believe the hype.  Ignore the buzzwords.  Know the facts—I am pleased that this thread has helped you do that.

But now, I know that blockchain is not for everyone. But when used correctly according to its purpose and strength, it is indeed a formidable technology.

Exactly.

[Carlton Banks]

The blockchain works great for currency systems, and to an extent, smart contracts (provided they are not needlessly complex, or else you risk losing all stored funds to a bug/hack/unintentional loophole).

This can be summed up by saying that blockchains are only useful for abstract information that benefits from being uncensorable, of which money and contracts are examples. Other examples I would include would be ID systems and data timestamping (Satoshi proved this in an inverted way by adding the famous "The Times 3.1.2009, Chancellor approves 2nd bailout" text to the genesis block, any data referenced in a blockchain can be verifiably proven to have existed at least after a verifiable time/date).

But when the 21m BTC supply was mined, miners will surely shift to a more mining-profitable coin that can lead to a lower Hashing power.

One of the side-effects of the rise of ASICs has been that Bitcoin is sharing its PoW scheme with only a handful of coins, signifcantly reducing the number of possible targets to alternatively point hashing power at. Nonetheless it is of course impossible to predict how the world and cryptocurrencies will look like a 100 years from now, given the latter still exist.

And this is one facet of a very significant reason to not switch POW algorithms.  Thank you.

Don't you mean this is the reason not to be holding any coin using the PoW algo to which Bitcoin's PoW algo is switched?

[nullius]

The blockchain works great for currency systems, and to an extent, smart contracts (provided they are not needlessly complex, or else you risk losing all stored funds to a bug/hack/unintentional loophole).

This can be summed up by saying that blockchains are only useful for abstract information that benefits from being uncensorable, of which money and contracts are examples. Other examples I would include would be ID systems and data timestamping (Satoshi proved this in an inverted way by adding the famous "The Times 3.1.2009, Chancellor approves 2nd bailout" text to the genesis block, any data referenced in a blockchain can be verifiably proven to have existed at least after a verifiable time/date).

Clickbait for hardcore Bitcoiners:

https://petertodd.org/2016/opentimestamps-announcement

https://opentimestamps.org/

But when the 21m BTC supply was mined, miners will surely shift to a more mining-profitable coin that can lead to a lower Hashing power.

One of the side-effects of the rise of ASICs has been that Bitcoin is sharing its PoW scheme with only a handful of coins, signifcantly reducing the number of possible targets to alternatively point hashing power at. Nonetheless it is of course impossible to predict how the world and cryptocurrencies will look like a 100 years from now, given the latter still exist.

And this is one facet of a very significant reason to not switch POW algorithms.  Thank you.

Don't you mean this is the reason not to be holding any coin using the PoW algo to which Bitcoin's PoW algo is switched?

No.  First off, the existing investment in ASIC hardware benefits Bitcoin security insofar as it locks miners into mining Bitcoin (or scamforks—hmmm).  If Bitcoin miners were forced to dump their existing investments in the trash and restart from scratch, they may very well decide to play the market with altcoins—especially since they might feel betrayed (and in the case of some of the better miners, they might have a point).  Moreover, the existing ASIC base provides a formidable hashpower which could not be rebuilt overnight.  Meanwhile, network would be relatively weak.  Lesser hashpower equals lesser resistance to anybody obtaining 25%/33%/51% of it.

There is a trade-off involved:  Mining is now much too centralized; and installed base obviously benefits incumbents.  But on the other hand, a switch would most benefit whomever could rapidly build out a new installed base.  That very well could be the same incumbents.

So as for what I meant.  As for what you said:

Any alt already using the hypothetical new Bitcoin POW would be potentially crushed out of existence, unless the new POW could be merge-mined.  Then, both blockchains would share a mutually beneficial symbiosis; and the existing alt would receive a security boost from the flood of new miners.  Of course, I don’t see great prospects for this unless the coins are not economic competitors; observe that Namecoin, inventor of merged mining, does not compete with Bitcoin as a currency.

[Carlton Banks]

Clickbait for hardcore Bitcoiners:

https://petertodd.org/2016/opentimestamps-announcement

https://opentimestamps.org/

Right. I'd like to think that tech like the above could be leveraged to create a database of author attribution (although I must stress: not the laughable "copyright" concept). It'd be a great way to promote the generalised use of cryptographic signing keys; anyone who believes their idea might be falsely attributed to someone else can submit a signed hash of their original works to a blockchain.

One of the side-effects of the rise of ASICs has been that Bitcoin is sharing its PoW scheme with only a handful of coins, signifcantly reducing the number of possible targets to alternatively point hashing power at. Nonetheless it is of course impossible to predict how the world and cryptocurrencies will look like a 100 years from now, given the latter still exist.

And this is one facet of a very significant reason to not switch POW algorithms.  Thank you.

Don't you mean this is the reason not to be holding any coin using the PoW algo to which Bitcoin's PoW algo is switched?

No.  First off, the existing investment in ASIC hardware benefits Bitcoin security insofar as it locks miners into mining Bitcoin (or scamforks—hmmm).  If Bitcoin miners were forced to dump their existing investments in the trash and restart from scratch, they may very well decide to play the market with altcoins—especially since they might feel betrayed (and in the case of some of the better miners, they might have a point).  Moreover, the existing ASIC base provides a formidable hashpower which could not be rebuilt overnight.  Meanwhile, network would be relatively weak.  Lesser hashpower equals lesser resistance to anybody obtaining 25%/33%/51% of it.

There is a trade-off involved:  Mining is now much too centralized; and installed base obviously benefits incumbents.  But on the other hand, a switch would most benefit whomever could rapidly build out a new installed base.  That very well could be the same incumbents.

Eventually, kakistocracy could overwhelm Bitcoin. S2X only failed because not enough people are presently foolish enough to swallow stories about politically motivated emergency hard-forks to different consensus rules defined by a different dev team. At some point, the balance of fools running Bitcoin nodes could be right for that to happen. PoW change is the only possible way to fight that scenario.

Although I hope that won't be necessary, I can see how some kind of technological improvement in semiconductor fabrication could decentralise mining with SHA-2 PoW. I would also point out that it would be surprising to me if SHA-2 has infinite longevity, but maybe that's a long-term problem.

Any alt already using the hypothetical new Bitcoin POW would be potentially crushed out of existence, unless the new POW could be merge-mined.  Then, both blockchains would share a mutually beneficial symbiosis; and the existing alt would receive a security boost from the flood of new miners.  Of course, I don’t see great prospects for this unless the coins are not economic competitors; observe that Namecoin, inventor of merged mining, does not compete with Bitcoin as a currency.

Yes, this is what I meant. Unless other cryptocurrencies using a hashing algorithm that Bitcoin uses have some in demand use-case that isn't duplicated by Bitcoin, then they're set to lose significant amounts of hashrate (assuming Bitcoin is still the dominant cryptocoin)

[cellard]

I think the most damage done to Bitcoin has been done by those that were promising challenging centralized payment methods such as VISA while doing it on-chain. This is a limitation of a blockchain that pretends to be decentralized. It's just going against physics basically.

The only way we can ever compete against a centralized system is via second layer solutions. Do we really need to?

I never saw the need for Bitcoin to be seen as a viable way to pay for your groceries when I understood the problems it had and how it was better suited as censorship resistant decentralized electronic gold of sorts. But maybe at this point we can't afford not being both, or at least attempting to be both. Is this possible? We'll have to find out. If LN is a success and on-chain transactions are still viable for "gold-tier" transactions, we will have both and this promise of "banking the unbanked" will actually become real, since some poor guy in Africa is better off with LN than with nothing else, the problem is again, if this will become a problem and make on-chain transactions non-viable at some point... again, we will need to find out.

[Wind_FURY]

The blockchain works great for currency systems, and to an extent, smart contracts (provided they are not needlessly complex, or else you risk losing all stored funds to a bug/hack/unintentional loophole). Alas, there are not many other practical uses for the blockchain, owing to the fact that the very premise of the blockchain requires distributed nodes (which usually requires monetary incentive or a token), and it also requires the transparency of data.

Is transparency really a requirement? I believe the Bitcoin blockchain was only transparent because there was no one developing any implementation for Bitcoin that can mask the sender's address, the receiver's and the amounts at that time.

We do now.

Now, it's very fun to think of big banks and companies using the blockchain for all of their transaction, but if this was implemented in the real world, the idea falls flat on its face. Why? Because no bank/company in their right mind would reveal all their information publicly, no bank/company in their right mind would let third (or even second) parties control their nodes. They would implement what is commonly known as a private blockchain. A private blockchain is also known as a database.

Not only that. A real "blockchain" is inefficient and slow. It's better if they stop joining the bandwagon and use Bitcoin.

[jhean_arcane]

Blockchain is a new kind of database - block or records connected to another block. That's the simplest explanation. However, I want to ask the hard question.

What are the limitations of blockchain? I know this is a really good innovation and I highly support it, not because I join the bandwagon, but because bitcoin will not exist if not because of it.... But I want to have a better understanding of the blockchain (in layman's terms please) if I want to get really serious about cryptocurrency and ICOs. My second question is, what are the things experts do to improve blockchain?

In addition to the aforementioned limitations of blockchain as enumerated by some contributors here on this forum,i would like to say that there are fears that that future development in cryptography may leave the blockchain vulnerable,ie hackable.That is why there is so much fear about the development of quantum computers,which may become commercially available 10-20 years time frame.Part of the solution to this future vulnerability is to use a bitcoin address only ONCE.Thanks to experts who already see the future.By the way,the world will have bigger problems to deal with when quantum computers become mainstay-sensitive military installations for example.

This is new info to me. Forgive my ignorance about quantum computers, but how will it be a huge threat to blockchain? i mean, i just can't see the point why blockchain will be vulnerable. I thought people are aiming to improve it?

[Xynerise]

This is new info to me. Forgive my ignorance about quantum computers, but how will it be a huge threat to blockchain? i mean, i just can't see the point why blockchain will be vulnerable. I thought people are aiming to improve it?

There are a lot of threads on Bitcointalk about the threat of quantum computers on bitcoin.
http://lmgtfy.com/?q=quantum+site%3Abitcointalk.org

The gist of the matter is that quantum computers can break ECDSA which bitcoin uses for digital signatures and will be theoretically able to calculate private keys from public keys.
This is prevented by not reusing addresses because addresses are not public keys but a hash of them and quantum computing can't do anything with them. (An address's public keys are exposed whenever a transaction is made with that address)

However this is not a significant threat as quantum computing isn't that advanced yet, there are better easier targets than bitcoins (or other cryptocurrencies), and bitcoin can always move to a quantum resistant algorithm.