Despite the complexity of Blockchain technology (the distributed ledger) there are no signs of its downfall or slowing progress. With time it has emerged as powerful technology and is becoming increasingly popular. Blockchain offers a way of recording transactions in a secure and transparent manner.
But there’s a lot of confusion surrounding this booming technology. Here we discuss some of the common misconceptions about this technology.
14 Myths About Blockchain Technology
Some common misconceptions about the booming Blockchain technology are explained below:
- Blockchain is Bitcoin: Bitcoin the cryptocurrency is more popular than its technology and this the reason why people mix Bitcoin with Blockchain. But in reality, Blockchain and Bitcoin are different. Blockchain is the technology behind Bitcoin, it enables peer-to-peer transactions whereas Bitcoin is the cryptocurrency that can be used to make transactions without third party involvement.
- Blockchain technology is designed for cryptocurrency only: Certainly, cryptocurrency and Blockchain go hand in hand, but they work independently. Blockchain technology the technological breakthrough can be used in different industries to make businesses dynamic. It can be used in various fields and has many applications.
- Blockchain activity isn’t available for public: The common misconception about Blockchain is it isn’t public; however, the reality is Blockchain is traceable and is available for public.
- Blockchain is simply for data storage: Another delusion about Blockchain is, it can be used as storage mechanism. However, the real benefit of Blockchain is seen when it is works as an exchange platform where two parties can make transaction one to send and one to receive.
- Coins and Tokens are equal: Blockchain has Initial Coin offerings (ICO) and tokens.Coins are a type of cryptocurrency that functions separately on Blockchain platform and has simple store of value while tokens need platforms such as Omni or Ethereum to function. Plus, it can be used to store multifaceted levels of value like income, utility, property and can seize commodities or loyal points.
- Blockchain is a database on cloud: Blockchain is simply a file that stores transaction records. You cannot store any type of physical information like a Word document or a pdf file. It only provides a “proof-of-existence” and contains a code to certify existence of a certain document not the document itself.
- Blockchain will change the world: Blockchain is used to verify authenticity of a person for complex and technical transactions. This means it mitigates the risk of tampering with the ledger, but it does not eradicate the threat of online fraud.
- Blockchain is free: Blockchain uses large amount of computing power to solve mathematical equation and someone needs to pay for this computer power that supports Blockchain service.
- There is only one Blockchain: There are many different technologies that can be classified as Distributed Ledger Technologies like Ethereum, Cords, Bitcoin’s Blockchain, IBM and Microsoft Blockchain-as-a- service.
10. Blockchain records can never be hacked or altered: Blockchains main selling point is its transparency. And this makes people believe Blockchain is invulnerable to outside attacks. But it isn’t true because no system or database will ever be 100% secure. However, more the system is distributed more secure it is believed to be. Blockchain can offer a way of verifying transactions and finding fraudulent ones. Blockchain is immutable is a myth because in two main ways changes can be made to the Blockchain.
- One is to recompute the chain this erases and recreated history.
- The other is to fork the chain this means the historical code and transaction will be preserved but software will work differently.
11. Blockchain can only be used in financial sector: Because of the first application created by Blockchain that brought changes in in financial sector, it is considered to be restricted. But it isn’t true, Blockchain has numerous areas of application. Outside finance Blockchain can be used in real estate, healthcare, and to create digital identity.
12. Blockchain is designed for business interaction only: Specialists are convinced that Blockchain will change the world and global economy like dot-coms. But linking Blockchain with business interaction only would be inappropriate because anyone using an Internet connection can use Blockchain and one can easily imagine how many people worldwide will be able to interact with each other.
13. Smart contracts have same legal value as regular contracts: Smart contracts for now are just a piece of code that execute actions automatically when certain condition is met. Therefore, they are considered different than regular contracts from legal perspective. But smart contracts are powerful tools when combined with internet-of-things (IoT).
14. Blockchain the new global economy: Since Blockchain technology is a distributed ledger it is perceived as the new global economy. But this isn’t true, Blockchain technology cannot render fiat currency useless anytime soon, because of the exorbitant mining cost, and it is having scalability issues.
Hope after reading these 14 myths about Blockchain your ideas about Blockchain technology has change and you have understood the reality behind the new technology. Blockchain isn’t constrained to cryptocurrency it has a much wider scope. Soon when people will see it being implemented in various sector they will understand that Blockchain and Bitcoin aren’t one and the same.