Current Blockchain Issues

Regardless of whether they are public, consensus, or private, blockchains have various problems such as interoperability, network latency, rising network fees, and storage risk with NFT data.

Here are some of the problems with blockchains we will try to minimize in our proposed solution.

Main issues of blockchain

1. Soaring Transaction Fees

Due to the high computational demands necessary for transaction validation, blockchain networks can be slow and inefficient. As the volume of users, transactions, and applications grows, blockchain networks struggle to process and validate them promptly. Consequently, blockchain networks are not suitable for applications that necessitate rapid transaction processing speeds.

Consensus algorithms such as Proof of Work (PoW) and Proof of Stake (PoS) are utilized by traditional blockchains like Bitcoin and Ethereum. However, these algorithms can be time-consuming and require a significant amount of resources. Consequently, these networks experience restrictions in terms of transaction throughput, frequently resulting in congestion and elevated transaction fees.

Different solutions have been suggested in order to address scalability problems, such as scaling systems designed for establishing off-chain channels, which enable quicker and more economical transactions.

Although blockchain experts have made some progress, the achievement of scalable, efficient, and decentralized blockchain networks remains an ongoing challenge that requires further exploration.

2. Network Congestion

One of the scalability issues that became apparent on the Ethereum mainnet was network congestion caused by the rise of DeFi protocols and NFT marketplaces in 2020–2021. During peak activity, gas fees spiked and transaction throughput slowed significantly, highlighting the broader challenge of scaling Ethereum and similar Layer 1 blockchains.

3. Irreversible Transactions

Transactions made on a blockchain cannot be undone or reversed once they are confirmed. Therefore, it is crucial for the sender to exercise caution and double-check that they have entered the correct recipient address for the transaction.

4. High Computational Costs

Proof-of-Work (PoW) consensus mechanisms secure networks through high computational power. However, this approach is energy intensive and has a substantial environmental impact. Validating transactions on a PoW-based blockchain requires significant computing resources, leading to concerns over carbon emissions and sustainability. In response, many blockchain projects have adopted alternatives such as Proof-of-Stake (PoS), which consume far less energy. Ethereum, for example, completed its transition from PoW to PoS in 2022 through “The Merge,” reducing its energy consumption by more than 99%. While this marked a major milestone in sustainable blockchain design, the industry continues to explore additional innovations to further minimize energy usage and strengthen environmentally responsible practices.

5. Security issues with PoS

While the shift to Proof-of-Stake has addressed the environmental concerns of Proof-of-Work, it also introduces different challenges. One such concern is that security risks increase when fewer validators govern the network. Specifically, if an individual or entity gains control of more than one-third of the stake, they could exert significant influence over consensus. Although this risk exists, it is considered improbable in widely distributed networks where tokens are broadly held.

6. NFTs and the permanent linkage of content data stored in decentralized storage

A significant portion of the content linked to NFTs is not directly stored on the blockchain. Instead, it is stored in external storage systems. However, if these external storage systems become non-functional or the data stored within them is lost, the symbolic and inherent value of owning an NFT also vanishes. This means that the unique and exclusive nature of the NFT, which is derived from its symbolic data, can be jeopardized in such situations.