Blockchain, the “distributed ledger” technology, has emerged as an object of intense interest in the tech industry and beyond. Blockchain technology offers a way of recording transactions or any digital interaction in a way that is designed to be secure, transparent, highly resistant to outages, audit-able, and efficient; as such, it carries the possibility of disrupting industries and enabling new business models.
With the popularity of blockchain technology rising, there comes many misconceptions. Like any complicated and popular topic, the facts can often be missed and misunderstood which can produce false facts that spread like wildfire. So here are 5 Famous Myths About Blockchain.
1. Blockchain is Bitcoin
Since Bitcoin is more famous than the underlying technology, Blockchain, many people get confused between the two. Blockchain is a technology that allows peer-to-peer transactions to be recorded on a distributed ledger across the network. These transactions are stored in blocks and each block is linked to the previous one, therefore creating a chain. Thus, each block contains a complete and time-stamped record of all the transactions that occurred in the network. On the Blockchain, everything is transparent and permanent. No one can change or remove a transaction from the ledger.
2. The Blockchain can be used for anything and everything
Though the code is powerful, it’s not magical. Bitcoin and Blockchain developers can be evangelical, and it’s easy to understand why. For many, the Blockchain is an authority tied to mathematics, not the government or lawyers. In the minds of some developers, the Blockchain and smart contracts will one day replace money, lawyers, and other arbitration bodies. Yet the code is limited to the number of cryptocurrency transactions in the chain itself, and cryptocurrency is still far from mainstream.
3. 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 such as Goldman Sachs or Barclays to heavily invest in it. 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.
4. The Only Application for Blockchain is Cryptocurrency
Similar to the idea that ‘Blockchain is Bitcoin’, people often think that only cryptocurrency and finance companies can leverage the power of blockchain. Every business and industry can use the underlying technology of distributed ledgers.
Blockchain can be applied to the entire healthcare value chain by using a secure public ledger to remove slow and outdated workflows. According to Deloitte, “The healthcare industry is planning the most aggressive deployments of blockchain, with 35 percent of health and life sciences planning to deploy by 2018.”
I have used blockchain (Hyperledger Fabric– to be precise), in my final year project to create digital certificate of the students and transfer them as a transaction to ensure immutability and secure ledger storage. This surely cleared my myth that blockchain only supports cryptocurrency frameworks.
5. The Blockchain is a magical database in the cloud
The Blockchain is conceptually a flat file – a linear list of simple transaction records. “This list is ‘append only so entries are never deleted, but instead, the file grows indefinitely and must be replicated in every node in the peer-to-peer network”
Blockchain doesn’t allow you to store any type of physical information like a Word document or a pdf file. It can only provide a “proof-of-existence” the distributed ledger can only contain a code that certifies the existence of a certain document but not the document itself. The file, however, can be stored in “data lakes”, the access to which is controlled by the owner of the information.
Although there are misconceptions due to popularity, for the same reason these will lessen over time as the general public becomes more educated with blockchain technology; whether it’s through self-education and interest or adoption by a company they recognise.