Opportunities and Challenges
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Social impact
Positive: Promotes digital inclusion and data sovereignty; Builds trust among participants in shared systems; Enhances accountability in aid, health, and governance services.
Negative: Blockchain benefits may exclude those without internet access or digital literacy; Even transparent systems can be misused to monitor or control behaviour; Decentralised systems may lack clarity in dispute resolution.
Economic impact
Positive: Reduces transaction and administrative costs; Creates new business models and efficiencies in logistics, banking, and agriculture; Enables financial inclusion through decentralised finance (DeFi).
Negative: High initial costs for setup and training; Regulatory uncertainties may deter investment; Cryptocurrencies, while enabled by blockchain, are volatile and susceptible to misuse.
Environmental impact
Positive: Supports green supply chains and energy audits; Enables clean energy trading using smart contracts.
Negative: High energy consumption by some blockchain systems.
Ethical considerations
Digital divide - While blockchain technology provides huge opportunities, it may marginalise even more those with no access to the internet and no/low digital literacy.
Data sovereignty - Owning the blockchain data is crucial for indigenous and vulnerable populations.
Exploitation - Blockchain projects risk exploiting the communities they aim to empower, if proper frameworks are not in place and especially when projects are led by external, profit driven technology companies.
Some downsides of blockchain are limiting its adoption, particularly in highly regulated sectors and those requiring high volume of transactions:
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High energy consumption - Although it is being gradually mitigated, the PoW blockchains (like Bitcoin) require high energy consumption and are still dominant in the blockchain ecosystem.
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Slow and costly transactions - With higher volume of transactions, processing time is slower and more expensive.
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Regulatory uncertainties – Legal frameworks vary and are mostly underdeveloped making compliance challenging.
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Irreversibility - Finality of transaction and no option to reverse it if when made in error.
The uneven adoption across sectors reflects ongoing concerns about scalability, regulation, environmental impact, and the broader societal implications of blockchain technology.
Blockchain’s integration with other technologies is unlocking new potential. For example, combined with IoT, it enhances data integration and automation, but scalability and latency challenges are still present. The same pattern of opportunities and challenges appears in blockchain’s integration with other technologies: AI, Cloud Computing, Cybersecurity, 5G.