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  • Writer's pictureEdward Lehman

Decentralization, Scalability, Security Holding Blockchain Back


Blockchain technology holds immense potential for industries and services by executing transactions in a verifiable and permanent way. It operates as an open distributed ledger that can record transactions between two parties.

Blockchain, sometimes referred to as distributed ledger technology (DLT), is an especially promising technology because it helps reduce risk, eliminates fraud and brings transparency in a scalable way.

As decentralization, scalability and security are the bedrocks to blockchain’s practical uses, they are also the biggest stumbling blocks to the digital ledger, and most importantly, why national legislation in the United States has been silence when addressing blockchain technologies, and instead


California is currently issuing certified copies of marriage records by means of blockchain technology.

Florida Department of Financial Services set up a task force to explore and develop a master plan for fostering the expansion of the blockchain industry in the state.


Illinois signed a law allowing for the secretary of state to recommend legislation, including uniform laws, necessary to support the possible use of blockchain technology for public records.

New Jersey passed a bill requiring the state to review and approve a viable blockchain-based, digital payment platform to provide payment services to legal and licensed businesses in the state that do not have access to traditional financial services and are forced to operate in cash-only or cash-heavy environments.


The aforementioned are just a handful of states that have blockchain-specific legislation. Nearly every U.S. state is working on some policy that codifies blockchain technology for use, particularly with regard to government adoption.

AmChamUSA supports legislation that positively pushes forward blockchain technologies, but is of the opinion the modest gains made on the state level are woefully insufficient to address national concerns.

The very nature of blockchain systems — decentralization, scalability and security — require national laws to better govern policy, and direct states on how to most efficiently undertake blockchain expansion at a local level.


Decentralization: This is the basis of blockchain, which allows for a non-centralized custodian ecosystem. As such, there are more than 6,500 active blockchain projects globally, with most of them based on different protocols, consensuses and privacy measures, as well as written in different coding languages.


Decentralized blockchains are immutable, which means that the data entered is irreversible, making transactions permanently recorded and viewable to anyone.

Scalability: The ability to have fast, mass transactions. Current blockchains can handle between 7-15 transactions per second. As new data comes in it is entered into a fresh block. Once the block is filled with data it is chained onto the previous block, which makes the data chained together in chronological order.

As an example, Bitcoin as a “proof of work” system takes about 10 minutes to add a new block to the blockchain. At that rate, it's estimated that the blockchain network can only manage about seven transactions per second.

By comparison, VISA claims it can handle up to 24,000 transactions per second.


Security: The immunity of a blockchain and its resistance to attacks.

On its surface, blockchain presents three kinds of security risks: structural, value transfer and smart contract.

  • Structural risks: As blockchain is underwritten by software, it can be subject to software flaws, which create a myriad of issues if a blockchain goes online without properly being audited for any flaws or loopholes.

  • Value transfer risks: Blockchain enables peer-to-peer transfer of value without the need for a central intermediary. The value transferred could be assets, identity or information. This new business model exposes the interacting parties to new risks that were previously managed by central intermediaries.

  • Smart contract risks: Smart contracts can encode complex business, financial and legal arrangements on the blockchain, and can result in risk associated with the one-to-one mapping of these arrangements from the physical to the digital framework.

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