Free Essay: Blockchain Technology Adoption Challenges

The technology industry began paying close attention to blockchain technology when Bitcoin was introduced in 2008 (Casino, et al., 2019). Since then, blockchain technology has become known as a new technology that underlies cryptocurrencies such as Ethereum and Bitcoin platforms. Blockchain technology has spread and numerous industries are discovering their capabilities and new blockchain use cases are coming up every day (Duy et al., 2018). The emergence of blockchain technology has had a profound effect on how information will be stored and processed securely. This paper seeks to conduct an in-depth study on the challenges of the adoption of blockchain technology in real-world contexts.

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Insufficient Knowledge of Blockchain

One of the biggest challenges in implementing blockchain technology is the lack of a clear understanding of technology. This lack of information has led to insufficient recognition of technical compliance, subsequent benefits of acquisition, and potential use cases (Janssen et al., 2020). Moreover, there is also inadequate awareness of the level of organization as well, where managers have shown unwillingness to adopt the novel technology; this is because of their failure to recognize significant returns on investment and lack of effective technology use cases. The confusion between Bitcoin and blockchain has also had a profound effect on this misconception (Janssen et al., 2020). Technology should isolate itself from the negative connotation of cryptocurrency and the concerted efforts of educated consumers are needed to spread greater awareness of the blockchain and its benefits beyond cryptocurrencies alone.

Initial Costs

The initial cost of adopting blockchain technology is very high owing to its complexity. Moreover, the adoption of technology currently requires either the development of a proprietary solution or soliciting the services of blockchain technology providers, which are very scarce (Koens et al., 2018). Because of the technical infancy of blockchain, there is a shortage of skilled professionals in this field. In addition, the new system may require resourceful hardware owing to the computation-intensive nature of the technology (Sadhya and Harshali, 2020). Therefore, the adoption of a blockchain-based solution currently exceeds the limited financial and operational limits for medium and small enterprises and applies only to a few rich individuals.

Lack of Trust

Contrary to the popular perception of blockchain as trustworthy technology, some users of the technology have expressed lack of confidence in it (Stratopoulos, 2018); this perception can be associated with the irrational understanding of technology and the confusion between Bitcoin and blockchain as well as its usage of ‘illegal or criminal activities’. Characteristics of blockchain technologies associated with transparency and decentralization hinders trust in the technology. Koens et al. (2018) further argued that Bitcoin-related news in popular media and its association with illegal activities has severely damaged the reputation of blockchain technology and even contributed to its negligence by many.

Implementation Dilemma

The dilemma associated with the implementation of blockchain technology greatly hinders its implementation (Woodside et al., 2020). For instance, businesses must purchase or develop blockchain-based solutions that work with their current asset systems or convert their existing systems into blockchain compliant. In addition, blockchain solutions may not offer the initial implementation of existing applications and therefore a parallel implementation may be appropriate (Janssen et al., 2020). In some cases, such similar arrangements may not be possible and may require integration of the novel programs with blockchain solutions. All of these solutions demand substantial financial resources, time, human expertise, and a clear guarantee of a good return on investment; this in effect, affects the adoption of blockchain technology.

Conclusion

Blockchain technology has attracted the attention of many organizations due to its prospects of multi-sector applications outside the finance field where it first began. However, the adoption of blockchain technology experiences challenges such as insufficient knowledge of blockchain, initial costs, lack of trust, and implementation dilemmas. The challenges identified in this paper are temporary owing to the innovation of the technology and as it develops, these challenges may be addressed.

References

Casino, F., Dasaklis, T. and Patsakis, C., 2019. A systematic literature review of blockchain-based applications: Current status, classification, and open issues. Telematics and Informatics, [online] 36(8), pp.55-68. Available at: <https://www.sciencedirect.com/science/article/pii/S0736585318306324> [Accessed 25 August 2020].

Duy, P., Hien, D., Hien, D., and Pham, V., 2018. A survey on opportunities and challenges of Blockchain technology adoption for revolutionary innovation. Proceedings of the Ninth International Symposium on Information and Communication Technology - SoICT 2018, [online] 20(5), pp.3-7. Available at: <https://doi.org/10.1145/3287921.3287978> [Accessed 25 August 2020].

Janssen, M., Weerakkody, V., Ismagilova, E., Sivarajah, U. and Irani, Z., 2020. A framework for analyzing blockchain technology adoption: Integrating institutional, market, and technical factors. International Journal of Information Management, [online] 50(3), pp.302-309. Available at: <https://www.sciencedirect.com/science/article/pii/S0268401219305067?via%3Dihub> [Accessed 25 August 2020].

Koens, T., and Poll, E., 2018. The Drivers Behind Blockchain Adoption: The Rationality of Irrational Choices. Lecture Notes in Computer Science, [online] 6(2), pp.1-9. Available at: <https://www.researchgate.net/publication/330015069_The_Drivers_Behind_Blockchain_Adoption_The_Rationality_of_Irrational_Choices_Euro-Par_2018_International_Workshops_Turin_Italy_August_27-28_2018_Revised_Selected_Papers> [Accessed 25 August 2020].

Sadhya, V., and Harshali, S., 2020. Barriers to Adoption Of Blockchain Technology. 1st ed. [ebook] New York: pdfs.semanticscholar.org, pp.1-8. Available at: <https://pdfs.semanticscholar.org/b63c/9a1f8c066ce1c9fa8b58a9df25cbf0790ad0.pdf> [Accessed 25 August 2020].

Stratopoulos, T., 2018. Blockchain Technology Adoption. SSRN Electronic Journal, [online] 2(4), pp.2-6. Available at: <https://www.researchgate.net/publication/326027496_Blockchain_Technology_Adoption> [Accessed 25 August 2020].

Woodside, J., Augustine, F., and Giberson, W., 2020. Blockchain Technology Adoption Status And Strategies. [online] Scholarworks.lib.csusb.edu. Available at: <https://scholarworks.lib.csusb.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1300&context=jitim> [Accessed 25 August 2020].