Nicolas Cole


5 Constraints Currently Facing Blockchain Technology

Blockchain emerged as an exuberant financial opportunity with a price and speculation boom in late 2017 to early January 2018—mainly to due to overestimations of what the technology could do and what it needs solved.

Now that prices have settled back down to more stable levels; it is important to understand what major developments are in the works and how to invest accordingly.

Some of the most important development themes in blockchain right now are focused on defining how blockchain can reach user adoption. This involves boosting the potential transaction volume, gaining corporate adoption, solving security questions, increasing transaction speed, and more. Ultimately, there are lots of problems that will need solving in order for blockchain to reach its full potential, but these are the most important ones being tackled right now.

Tools for Developers

After nearly a decade since the launch of Bitcoin, the landscape for tools which enable developers to quickly build useful dApps remains barren.

If a developer wanted to quickly build an “Uber for dry cleaning” type of app, for example, he or she could build a simple prototype in a weekend thanks to development frameworks like Ruby On Rails and React Native—which have skeletons for these kinds of apps already written. However, if a developer wanted to build a “Decentralized Uber,” they would have to essentially start from scratch.

However there are many projects working to solve this. One framework is Embark from Status, which gives developers tools to more quickly test and deploy smart contracts.

The faster developers can bring applications to the blockchain, the more quickly adoption will spread.

Off-chain Solutions

Currently, most blockchain systems are set up so that every transaction needs to be verified by the blockchain and all parties need all information.

Unfortunately, this often leads to blockchain congestion—as seen in late November, 2017, when CryptoKitties took up over 10% of Ethereum transactions.

In order to help boost the scalability of blockchain, there need to be off-chain solutions available.

Off-Chain solutions are often referred to as “state channels.” Currently Bitcoin is working on the Lightning Network and Ethereum has the Plasma Network. Users are able to handle a large volume of transactions between other users and eventually settle the “end state” with the blockchain.

Once these projects are fully developed, transaction volume and speed should both increase across the board.


According to Wired, the SEC made an unofficial announcement weighing in favor of Ethereum and Bitcoin being considered utility tokens rather than security tokens. This announcement also mentioned that Ethereum’s issuance was a security offering and many of the ICO’s occurring right now are security offerings. While the SEC has not made many official rulings on the future of blockchain, this announcement makes it seem likely that they will be eliminate fraud, but not hurt industry expansion.

It is expected that the SEC will make their announcement sometime in the coming months and when that happens the state of the industry will change drastically. Firstly, the massive ICO trend could slow down with stronger regulation, fraudulent tokens could be shut-down, and more institutional money will likely enter the space.


There are a number of different blockchains and many different protocols, that mostly cannot work together. For instance, it is not possible to pay for an Ethereum smart contract with Bitcoin. This causes a reduction in network effects, since people need to choose where to store their money, what applications to use, and what platforms to build upon. Unfortunately, the technology which would allow for trust-less cross-chain transactions, Atomic Swaps, is still not yet developed.

A variety of projects are currently trying to unleash interoperability solutions that can allow for different blockchains to work together such as Polkadot or Cosmos. Some of these solutions have more of an investment and payment orientation, but some offer broader solutions. Anywhere this technology can help unite the blockchain space will boost its functional value and in turn boost prices.


With recent exchange hackings and a variety of major blockchain hacking incidents, there are big questions about the security of blockchain posed by the more risk-averse public. While most blockchain enthusiasts will note that much of blockchain is safe if certain precautions are taken, that is not good enough for mainstream adoption.

There needs to be a more secure option for average investors to invest in and use blockchain. For example, projects such as 0x pose decentralized measures as options for security, while Coinbase focuses on heavy investment internally in their system security. Whatever the result ends up being, the mainstream public will need to know that without a doubt they won’t lose money by using blockchain.

Overall blockchain is in a tremendous place to see an uptick in development, adoption, and investment. Some of the major problems currently facing blockchain have solutions in the works or at least a path forward. As these are completed and the industry is more palatable for the public there will be a sharp rise in usage and adoption.

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