The rising popularity of cryptocurrencies also introduced many myths surrounding blockchain, which not only created misconceptions about the technology but also derailed its adoption by the masses. That is why, today we will debunk five common blockchain myths.
- Blockchain and Bitcoin are the same thing
The cryptocurrency phenomenon led to this common myth about blockchain. Although Bitcoin is just one application of blockchain, people still use the terms “Bitcoin” and “Blockchain” interchangeably. Blockchain technology, on the other hand, can be used and configured for many other applications. The technology enables peer-to-peer transactions to be recorded on a distributed ledger throughout the network. Every organisation and industry around the world can use the underlying technology of distributed ledgers.
2. Blockchain is only used for cryptocurrencies
While blockchain is the technology powering cryptocurrencies, it is not the only case for blockchain. One of the admiring capabilities of blockchain is disrupting mainstream industries, not only the financial industry. For instance, in healthcare, medical data are streamlined across organisations and patients are allowed to control their medical records. An example of an organisation offering real-world blockchain solutions is Finterra, a FinTech company focusing on the development of its digital banking solution and the range of services it provides.
3. There is one type of blockchain
The first type of blockchain is a public blockchain, which has absolutely no access restrictions. This means anyone can read or write the blockchain, audit and review anything at any time. The largest, most known public blockchains are the Bitcoin and Ethereum platforms. The second type of blockchain, private blockchain, is permissioned. A person will not be able to join it without an invitation by the network administrators. An example of a private blockchain is Hyperledger. The final type of blockchain is a hybrid blockchain, like Dragonchain, which combines the privacy benefits of a permissioned blockchain with the security and transparency benefits of a public blockchain.
4. Blockchain is tamper-proof
This statement is not accurate. When a blockchain uses a system of proof called proof-of-work (PoW), it can be tampered with if more than 50% of the network-computing power is controlled and all previous transactions are rewritten, which is largely impractical.
5. Blockchain is not really decentralized
Blockchain is inherently a decentralized technology and, therefore, requires multiple nodes to participate and validate the block of transactions before adding them to the chain. However, it is still a possibility for a smaller group to obtain control over the network by investing heavily in computer hardware to validate transaction blocks. Nevertheless, the open source code and architecture of blockchain ensures that all members can see this behaviour, and if they decide to stop participating, the networks will be worthless.
These are just five of the common misconceptions surrounding blockchain. It is important to be well-educated in this technology, for those who are looking to take part in the market. It is no secret that blockchain, along with the promises and potential it holds, has drawn the attention of people and organisations on a global scale.
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