Blockchain has shown a great potential to be the next disruptive technology, with some experts claiming it to be the ‘second coming of the internet’.
Blockchain technology offers a way of recording transaction or any other form of digital interaction in a way that will make it secure, transparent, highly resistant to outages, auditable and efficient; as a result, it carries the possibility of disrupting industries and enabling new and improved business models.
At this time, both Bitcoin and blockchain are both growing at an exponential rate and now stand on the brink of widespread recognition and implementation. Nevertheless, to avoid missed opportunities and disruptive surprises; strategists, planners, and decision-makers across the industries should pay attention and begin to investigate applications of the technology world.
The industry and the general public at large need to combat some of blockchain’s prevailing myths before the technology can be fully embraced.
Myth #1: The Blockchain is a magical database in the cloud.
The Blockchain is conceptually a flat file – a linear list of simple transaction records.
Unlike a Word document or a PDF file, blockchain does not allow you to store any type of physical information. What it can do is provide a ‘proof-of-existence’, which basically means that the distributed ledger can only contain a code that proves and certifies the existence of a certain document. The file can instead be stored in ‘data lakes’, the sole access to which is controlled by the owner of the information.
Myth #2: Blockchain is going to change the world.
Indeed, the blockchain can be used for more complex and technical transactions like verifying the authenticating the identity of a person or verifying legal documents. Aside from these applications, there are developments of a blockchain system for the application of the bill of lading in trade finance which will ultimately reduce cost and increase transaction speed.
While blockchain can support these applications and reduce malpractices, it does not eradicate the threat of online fraud, which casts a shadow of doubt over its confidentiality. Additionally, the use of blockchain technology will still be inefficient for many of these applications when compared to maintain a traditional ledger.
Myth #3: Blockchain is free.
The blockchain is neither cheap nor efficient to run at the moment. The reason is that it involves multiple numbers of computers solving mathematical algorithms to arrive at a final indisputable result, which becomes the SVY or single version of the truth. Each ‘block’ in the blockchain uses a large amount of computing power to solve these algorithms. Ultimately, someone has to pay for these computers and the electricity bill they generate, which is not cheap, to say the least.
Myth #4: There is only one Blockchain.
Blockchain as a whole comes in many different forms. There are public and private to open and closed-source blockchain technology as well.
The common factor is that they are supported by cryptocurrencies and are distributed in a form of a consensus mechanism. Bitcoin’s blockchain, ethereum, Corda and IBM’s blockchain as-a-service can all be classified as Distributed Ledger Technologies.
Myth #5: The Blockchain can be used for anything and everything.
The code used in blockchain is powerful, to say the least, but that does not make it magical. For many, blockchain is an entity, that owes its allegiance to mathematics instead of a government authority. In the minds of developers and experts alike, blockchain will one day replace money, lawyer money or any other moderating bodies. Yet the code used is only limited to cryptocurrency, which is still far away from mainstream services.
Myth #6: The Blockchain can be the backbone of a global economy.
Technology evangelists hope that private blockchain networks can provide foundations for dozens of encrypted and trusted currency, as no public entity or national government owns blockchain. On the surface, the Bitcoin Blockchain network appears massive.
Yet a Gartner report recently claimed the size of the Blockchain is similar in scale to the NASDAQ network. If cryptocurrency takes off, and records are generated larger, this may change. For now, though, the Blockchain network is roughly analogous to contemporary financial networks.
Myth #7: The Blockchain ledger is locked and irrevocable.
Large-scale transaction databases like bank records are, by their nature, private and tied to certain financial institutions.
Fraudulent transactions— double spends, in industry parlance—are rejected by the network, preventing fraud. Because mining the chain provides a financial incentive in the form of Bitcoin, it is largely believed that rewriting historic transactions is not in the financial interest of participants. For now, However, as computational resources improve with time, so too does the potential for deception. The impact of future processing power on the integrity of the contemporary Blockchain remains unclear.
Myth #8: Blockchain records can never be hacked or altered.
One of the main selling points about Blockchain technology is their inherent permanence and transparency. When people hear that, they often think that Blockchain technology is invulnerable to outside attacks.
No system or database will ever be completely secure, but the larger and more distributed the network, the more secure it is believed to be. However, Blockchain technology can only provide a way of catching unauthorized changes to records.
Myth #9: Blockchain can only be used in the financial sector.
Blockchain started to create waves in the financial sector because of its first application, the bitcoin cryptocurrency, which directly impacted this field. Although Blockchain has numerous areas of application, finance is undeniably one of them. The important challenges that this technology brings to the financial world pushed international banks to heavily invest in it.
World Blockchain Summit is the perfect platform to dispel any myths and notion about Blockchain and thus accelerate the pace of adoption.