Part 4: Lessons Learned – Cross-Cutting Challenges and Operational Conditions

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The preceding discussion has tried to present a balanced, evidence-based portrait of blockchain at this particular moment in its evolution and as a social and economic phenomenon. In its short history—Bitcoin emerged only in early 2009—substantial myth and distortion have attached to blockchain. This had clouded our ability to understand what it really is, and its true potential impact. The purpose of this report has been to unpack some of the myths, and to try to understand blockchain’s possibilities as an agent for social change, particularly as it is applied to the identity lifecycle.

If there is one overarching conclusion that flows from our research, it is this: despite the limitations of blockchain, despite the hype surrounding the technology—and despite the backlash to that hype—blockchain’s potential to create positive social transformation is real. However, it is important to emphasize that this potential can only be realized for certain types of use cases and under specific conditions.98 This more granular understanding is critical to understanding blockchain’s potential, and to harnessing that potential.

In this section and the next, we present some of the challenges of using blockchain, as well as necessary conditions and specific design principles to overcome those challenges and enable Blockchange. Although only a preliminary discussion (our research is ongoing), these operational conditions and design principles can serve as a toolkit for individuals and organizations seeking to deploy DLTs and blockchain-based applications or platforms within a social change context.

During the design, implementation, and scaling processes of different Blockchange projects, a number of persistent challenges tend to surface again and again. In this section we examine six of the most commonly occurring and potentially disruptive challenges facing actors seeking to create positive social change with blockchain.

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Cross Cutting Challenges Icon
Cross Cutting Challenges


User Interfaces

User interfaces of blockchain for identity solutions are often neither clear nor compelling. As a result, incentivizing individual users is difficult.

Blockchain brings together a number of complex technologies – “P2P networking, distributed timestamping, cryptographic hashing functions, digital signatures, and Merkle trees, among others.”99 To date, the user-friendliness of many implementations of these complex technologies is lacking, creating challenges to broad, mainstream adoption.100


Incentivizing Use

Incentivizing use at the institutional/legacy level will be required for many blockchains in order to identify initiatives that provide true value.

Similar challenges—concerning user interfaces, incentives, and others--confront institutional users as individual ones. Incentives questions are particularly pressing when institutions must replace existing legacy systems. Many Blockchange initiatives seek to circumvent and disrupt legacy systems with the goal of establishing a fully self-sovereign and decentralized replacement; given the long time horizon for such solutions to reach critical mass, partnership with relevant domain area institutions will likely remain essential for use and impact.


Technical Inefficiencies

Technical inefficiencies embodied especially in proof-of-work mechanisms in some (but not all) blockchains can create major environmental concerns.

  • Although blockchains can help increase institutional efficiency, Nouriel Roubini argues that they are “less efficient than existing databases,” with higher requirements for storage space, computational power, and with higher latency levels than in a centralized database.103
  • In many blockchains, the inefficient-by-design proof-of-work mechanism has significant—and negative— ecological impacts. Mining on the Bitcoin blockchain, in particular, is creating an unsustainable carbon footprint.104



Risks (including to intended beneficiaries from vulnerable communities, like refugees) can outweigh the potential value created by certain blockchain-for-identity initiatives

  • Blockchain’s sophisticated cryptography is often viewed as a means for creating high levels of information security. Many blockchain implementations, however, rely on private keys handled by the end user. These keys can introduce otherwise non-existent information security and personal privacy concerns should they be lost or stolen.105
  • The “coercive force” of immutability has surfaced concerns regarding the removal of human agency and decision-making in some processes. Smart contracts, in particular, can be used to create an immutable “absolute law”106 that cannot be altered or iterated upon without significant transaction costs and distributed buy-in.
  • Blockchain’s immutability can also amplify issues surrounding the notion of “garbage in; garbage out.””107 If low quality information is allowed to enter the blockchain, not only will it negatively impact resulting actions, but the low-quality information will remain on the blockchain permanently (unless significant transaction costs are undertaken to rectify the issue).
  • These challenges are especially salient given the use of privacy-preserving, zero knowledge proof approaches. Zero knowledge proofs leverage an automatic system for determining whether or not something is true without sharing information with the authenticating entity.108


Measuring Impact

Measuring impact remains a challenge, and the lack of clear metrics of success negatively affects attempts to scale up.

With the vast majority of Blockchange applications still at the conceptual or pilot stage, impact measurement is lacking. Moreover, given that much of the field of experimentation is being driven by startups in the private sector, open and context-specific impact measurement will likely remain a challenge without leadership from the public, academic, and civil sectors.

  1. Nouriel Roubini and Preston Byrne. “The Blockchain Pipe Dream.” Project Syndicate, March 5, 2018. 

  2. Garrick Hileman and Michael Rauchs. “2017 Global Blockchain Benchmarking Study.” September 22, 2017. 

  3. Iyke Aru. “User Interface - The Missing Link to Mainstream Adoption of Blockchain.” Coin Telegraph, June 11, 2017. 

  4. Lucas Mearian. “Will blockchain run afoul of GDPR? (Yes and no).” ComputerWorld, May 7, 2018. 

  5. Jack Filiba. “The Role of Patents in Blockchain Innovation.” Coinsquare, May 2, 2018. 

  6. Nouriel Roubini and Preston Byrne. “The Blockchain Pipe Dream.” Project Syndicate, March 5, 2018. 

  7. Emily Atkin. “The Environmental Case Against Bitcoin.” The New Republic, December 5, 2017. 

  8. Mark Frauenfelder. “ ‘I Forgot My Pin: An Epic Tale of Losing $30,000 in Bitcoin.” Wired, October 29, 2017. 

  9. MyungSan Jun. “Blockchain government - a next form of infrastructure for the twenty-first century.” Journal of Open Innovation: Technology, Market, and Complexity, February 13, 2018. 

  10. Jemima Kelly. “Blockchain insiders tell us why we don’t need blockchain.” Financial Times. May 2, 2018. 

  11. Lukas Schor. “On Zero-Knowledge Proofs in Blockchains.” Medium, March 23, 2018.\@argongroup/on-zero-knowledge-proofs-in-blockchains-14c48cfd1dd1