The main technical flaws of the blockchain include the following points.
● Lack of privacy.
Blockchain is a fully distributed peer-to-peer ledger system responsible for maintaining complete historical transaction records. All transaction details, such as the quantity of goods and the transfer amount, the accounts involved, and the transfer time and other information, can be checked by everyone. This is necessary in order for everyone to have clear ownership and to verify new transactions (e.g. to identify double spend attacks). Therefore, the lack of privacy becomes a flaw of the blockchain. Without transparency, blockchain cannot fulfill its role. However, this transparency is often seen as a limiting factor to realize its application, especially when it is applied in the real world with high privacy requirements.
● Safe Mode.
The blockchain uses an asymmetric encryption algorithm to verify user identity and authorize transactions. The blockchain account can actually be regarded as a public key, and only users who hold the corresponding private key can obtain the assets in the account. Only transaction data containing digital signatures are valid and can transfer assets between accounts, and digital signatures are generated through private keys. The private key is the only tool to prove ownership. As long as the private key of an account is leaked intentionally, the security of this independent account cannot be guaranteed.
Beyond that, other security measures to protect account assets are non-existent. What needs to be pointed out here is that the asymmetric encryption algorithm adopted by the blockchain is by far the best and most powerful encryption method. Therefore, the security of the blockchain itself is very strong. However, in addition to this, the blockchain system has no other security measures to prevent users from losing or leaking their private keys. It's the same PIN code you use to protect your house, car, and credit and debit cards in everyday life. Once you give the keys to others, no matter what the reason behind it is, the security of your assets can no longer be guaranteed. Only the person who actually holds the keys or knows the PIN code can drive away your car or take your money. The private key of a blockchain account is no exception. However, some people think that too single security measures are one of the main factors limiting the application of blockchain.
● Scalability limitations.
Blockchain, a peer-to-peer system, is designed to achieve two goals: first, to allow everyone to add new transaction records to a collectively maintained history; second, to ensure that the history of transaction data cannot be manipulated or falsified. The way a blockchain balances these two goals is by adopting an immutable data structure that only allows new data to be added, and requiring the solution to the hash puzzle when a new block is added (solving the hash puzzle is very time-consuming) . Solving hash puzzles is an effective way to prevent manipulation of historical transaction records, because it is extremely expensive to achieve. Unfortunately, the cost of adopting this security measure is a decrease in transaction processing speed, thus limiting the scalability of the blockchain. This feature of the blockchain is seen as a major obstacle to its application in high-processing-speed, high-scalability, and high-throughput environments.
● High cost.
Solving hash puzzles or making sure the proof-of-work algorithm works is extremely computationally expensive. It is this security measure that guarantees the immutability of historical transaction records. The calculation cost mentioned here includes the input of time, electricity and so on.
● Hidden centralization attributes.
People with the necessary financial resources invest in specialized hardware for solving hash puzzles, thereby contributing to the system and being rewarded. On the other hand, it becomes unprofitable for someone without specialized hardware to validate transactions and add new blocks to the system, which ultimately just makes them opt out of contributing computing resources to the system. Therefore, the originally large number of nodes with diverse members will eventually evolve into a small number of nodes controlled by enterprises.
● Lack of flexibility.
Blockchain is a complex combination of technologies, consisting of a series of protocols that are optimized to be compatible with each other. Changing this well-organized system is extremely challenging.
For example, the encryption algorithm used must remain valid for the lifetime of the blockchain, which is likely to be centuries. The same is true for blockchain algorithms and conflict resolution.
Due to the immutability of the blockchain, it will be difficult for even those who develop the blockchain to fix bugs or adjust the blockchain protocol. These characteristics have caused the entire blockchain system to be incomparable with other systems in terms of flexibility.
● Thresholds.
The anti-manipulation feature of the blockchain, and the credibility of jointly maintaining historical transaction records are based on the assumption that most of the computing power in the system is controlled by honest nodes. However, in a small peer-to-peer system with limited computing power, the above-mentioned majority may still be a minority, so it is likely to lead to a 51% attack. This problem is especially important for "cryptocurrencies" with insufficient user numbers and low market capitalization. Therefore, all blockchains need to ensure that they have certain integrity nodes to prevent attacks by computing power. Reaching a specific node size to prevent 51% computing power attacks is a challenge that every new blockchain system must address.