Myths About Blockchain

  • By xcrypto
  • January 8, 2019
  • Comments Off on Myths About Blockchain

Myths About Blockchain

 

Beginning with an instance, just like in J.K.Rowling’s Harry Potter series, the world of wizard considers dangerous to speak the name of YOU KNOW WHO.

 As the story unravels, readers learn that Lord Voldemort was a bright young wizard before he turned evil. 

He unwittingly leaves a part of him to reside in Harry Potter, who eventually defeats him.

The story of the blockchain, the technology powering bitcoin, is equally magical.

 From a feared name, restricted to water-cooler gossips, to boardroom conversations, blockchain has come a long way.

Cryptocurrencies like Bitcoin are built upon the underlying infrastructure of the blockchain technology.

With every new technology, there is hype and there is reality and this is the same with bitcoin.

Bitcoin started in 2008 in response to the subprime crisis. 

In 2011, it gained infamy for the association with Silk Road, the dark web marketplace for drugs and guns.

 A few years later, bitcoin is a household name and, more importantly, it has kindled interest in the blockchain. 

Enterprises no longer fear the technology.

Blockchain??

Everyone has heard of blockchain technology by now unless you’ve been living under a rock, that is. 

The best way to understand blockchain is to think about it as a collection of records, or as a sort of ledger which contains financial transactions.

And this ledger is shared between a network of computers and updated regularly.

It is a distributed ledger which is an essence of the blockchain.

In other words, Blockchain provides a mechanism whereby data is stored in data blocks.

And these data blocks are linked cryptographically (using hash functions) to form a chain.

In such a way that it is computationally infeasible to change data in a particular block, without having to alter data all the subsequent blocks in the blockchain.

Blockchain technology came to prominence with the advent of Bitcoin in 2008 – the cryptocurrency credited to the mysterious Satoshi Nakamoto.

 The potential applications of Blockchain are numerous and updating day by day.

As it is already being put to use in everything from transferring money and arranging musicians to fighting world hunger.

The most common Myths about Blockchain are as follows:

 

 

Myth1: Blockchain is all about money

While it is true that the first blockchain was used for the digital currency Bitcoin.

But the potential of blockchain technology goes far beyond money and finance.

Today blockchains are being used to building services on smart contracts, digital identity solutions, cloud storage, voting systems, and even aircraft safety. 

The blockchain does not care what type of data is contained in the ledger, as it is effectively just a list of records.

The reason why many people think that blockchains are all about money is perhaps that Bitcoin is the most popular of all blockchains.

Both the terms are used in close conjunction with each other.

Outside the financial sector, Blockchain can and will be used in real estate, healthcare or even at a personal scale to create a digital identity.

 Individuals could potentially store a proof-of-existence of medical data on the Blockchain and provide access to pharmaceutical companies in exchange for money.

 

 

Myth2:  Bitcoin And Blockchain are Same

This found as the most common misconception among people.

Blockchain technology powers bitcoin where Bitcoin popularized Blockchain. 

And this comparison ends there, Blockchain applications are far and wide.

There are many other blockchains out there like Ethereum, Waves, and Ripple.

 Each blockchain is conditioned for a different purpose. Bitcoin may have gotten there first but it is not the same thing as blockchain.

 If you think of blockchain as the base on which Bitcoin is built, you will get it right each time.

There are many different technologies that go by the name Blockchain. 

They come in public and private versions, open and closed source, general purpose and tailored to specific solutions.

This myth is widespread because many people assume that Bitcoin Blockchain is the only blockchain and that the two are interchangeable.

 

 

Myth 3: Tokens And Coins Are the Same Things

Blockchain has tokens and Initial Coin Offerings (ICO). 

Coins have only one utility – to act as a simple store of value.

Tokens can store complex levels of value like property, utility, income, and fungibility. 

Property can be real estate transactions or intellectual property. 

Tokens can capture commodities or loyalty points. 

 

 

Myth 4: Blockchain or Cryptocurrency is for Criminal.

It’s true that decentralization and anonymity are particularly nice features for criminals.

But there are also great features for law-abiding citizens who are in an economically or politically unstable environment.

 If you are unable to trust local banks with your money due to corruption.

 If your country has the possibility of destabilizing, it’s arguably the best place to keep your money. 

As in the beginning, I discussed Bitcoin, and in turn, the Blockchain has gained some infamy.

This is because of the currency of choice of online drug dealers, namely on the silk road marketplace and in other high profile cases. 

It has also been used in a number of ransomware attacks.

This myth largely exists.

However, Bitcoin and other cryptocurrencies are also used for perfectly legitimate reasons.

The Bitcoin blockchain has a public record of each transaction that takes place on it, so it is perhaps not the best currency to use for criminal activity.

It would probably be better just to use cash for such purposes not that we are encouraging you to start a career in crime.

It is vital to remember that like all other currencies Bitcoin is simply a way of exchanging value.

 

 

Myth 5: Blockchain is designed for Business interactions only

Experts in Blockchain are convinced that this technology will change the world and the global economy just like dot-coms did in the early ’90s. 

Hence, it is not only open to big corporations; it is accessible to everyone everywhere. 

If all it takes is an Internet connection to use the Blockchain, one can easily imagine how many people worldwide will be able to interact with each other.

Blockchain often gets positioned as a technology that will change how businesses record and manage transactions.

 Compared to current methods, it is actually more process intensive, difficult to scale and takes more time to confirm transactions.

 As for security, it’s mostly useful if there is a need for a secure verification and immutability of transaction records.

 Otherwise, use cases are limited.

 

 

Myth 6: Blockchain Is Free Or Cheap

Despite the commonly held belief, Blockchain is neither cheap nor efficiently free.

 It involves multiple computers solving mathematical algorithms to agree with a final immutable result, which becomes the so-called single version of truth (SVT). 

Each ‘block’ in the Blockchain typically uses a large amount of computing power to solve. 

And someone needs to pay for all this computer power that supports the Blockchain service. 

Computing power incurs real-world costs such as electricity, manpower, and infrastructure.

This is the reason why Bitcoin mining is mainly centered around countries with cheap hydroelectric power, cheap manpower, and cooler environs. 

The popularity of this myth is likely due to the fact that the cost of sending funds from one part of the world to another, using Bitcoin or other digital currencies, is comparatively lower than traditional money transfer.

 

 

Myth 7: Blockchain Is Not For Enterprises

Enterprises are quirky entities, wanting to get on to blockchain bandwagon, but hesitant.

 The enterprises see the potential benefits of blockchain—eliminating middlemen and redundancy.

This helps in gaining a real-time view of their business and avoiding costly disputes and resolution, but wary of the scalability and security issues plaguing bitcoin.

Blockchain has separated from bitcoin.

 Private flavors of the blockchain, offering higher scalability and security, have started rolling off the block, to address the needs of the enterprises.

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