Blockchain Benefits and Limitations

Random Observation/Comment #534: If I had a nickel for every time I heard “we’re not interested in bitcoin, but the underlying technology of blockchain will change the world” I might have a bitcoin.

chain imagination

Blockchain has been on everyone’s mind and I’ve been looking at it for about a year now. I created my own clemcoin, wrote smart contracts, and explored 10+ developer platforms in the blockchain space. The tech is still in the infant stages focusing on software and tools, but it has enough momentum (and VC funding) to go quite far. It looks like blockchain startups are springing up every month and getting some great exposure to large financial companies.

I think there are enough posts out there explain what blockchain is, but here’s my opinion on some of the major benefits, buzzes, and limitations.

Core Benefits

  • Single log/chain of transactions (stored in blocks)
  • Immutable agreed upon distributed ledger in consensus
  • Peer-to-peer network with 24/7/365 up-time
  • Encryption/Security around transactions, accounts, and blocks
  • Combination of user account entitlements, developer accounts, and published applications (for Ethereum and Tendermint)
    • Think: Git + bit torrent + cloud entitlements
  • Normalization of technology infrastructure and messaging
  • Agreed upon reference data and oracles (if implemented correctly)
  • Nodes running blockchain could be regulators
  • Multi-sig and automated execution of contracts
  • Motivation for large centralized systems to work together in a consortium to build a solution
  • Nodes could be easily spun up at any time with full replication of the database
  • Direct transfer of ownership (in coins, tokens, and smart contracts)
  • Connectivity to other cross border nodes


  • Depending on implementation, limited number of tokens on the chain
  • Depending on implementation, public/private chain with pseudo anonymous transparency
  • Proof of work (while most secure) is a massive waste of electricity
  • An increased number of transactions cause network strain
  • Open Source (good and bad)
  • No multi-processing and sharding yet for infrastructure
  • Real-time asynchronous feeds have not been solved (volume is too high if a smart contract publishes latest value at any time – everything is still polling)
  • Legal issues with securities and cross border
  • All nodes must run the same service
  • All nodes receive the same code and execute the same programs when processing transactions
  • All nodes must store all transactions (with data that may not be relevant to them)
  • Software on smart contracts (EVM) are difficult to design with limited functionality (difficulty with large numbers, arrays, and looping implementations)

~See Lemons Study Blockchains