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Blockchain is a promising technology, but bottlenecks and complex challenges lie ahead

Blockchain is a tamper-resistant and time-stamped database (ledger) operating through a distributed network of multiple nodes or users.

As such, it can validate transactions and update records in a synchronised, transparent and decentralised way.

Blockchain is based on a particular combination of key features:

  • decentralisation,
  • tamper-resistance,
  • transparency, security and
  • smart contracts.

But it is still at an early or emerging stage. Depending on the type of blockchain, challenges can include:

  • scalability and performance,
  • interoperability,
  • integration with legacy systems,
  • high energy consumption, and the
  • protection of personal, sensitive and confidential data.

Image: how a blockchain works - the process of blockchain
How a blockchain works

©European Union, 2019