Almost everywhere in the world blockchain technology is dominating the market. Even if some people aren’t using it right now, they are certainly thinking about it. However, blockchain being a relatively new technology and a new way of doing business as well. People feel a bit skeptical of the blockchain technologies promises and because of which many myths are beginning to arise.
Some may be close to the truth and others are simply absurd. Well today we will get to the bottom of the truth. Here are some of the most common myths about blockchain technology busted!
Blockchain is completely free
This is, without a doubt, one of the most popular Blockchain myths you’ve heard. While the cost of blockchain has been mainly correlated with the use of powerful computers to solve mathematical equations in comparison to Bitcoin, the true cost paints a somewhat different image. Bitcoin mining necessitates the use of costly, efficient hardware that consumes more electricity. Mining cryptocurrency may use up to 140 terawatt-hours of electricity, implying a significant expense. As a result, there is no reason to assume that Blockchain is or will be free in the near future.
Blockchain is completely anonymous & untraceable
Almost every newcomer in blockchain world believes that blockchain-based cryptocurrencies will facilitate in the anonymous payment of goods and services. The argument isn’t entirely inaccurate, though. The blockchain just keeps track of the wallets’ public addresses, alleviating the need to reveal the wallet owner’s identity. Recent studies, however, have indicated that the use of cryptocurrencies to make payments for illicit activity could be traceable. Anyone who can connect a wallet’s public address to an individual’s real-life identity can track the latter’s entire history of transactions.
Blockchain and Cryptocurrency are the same things
The launch of Bitcoin in 2009 was the first instance of mainstream acceptance for Blockchain. As a result, many people mistake Blockchain for a cryptocurrency. Cryptocurrencies, on the other hand, are essentially another application of Blockchain technology. Blockchain is essentially a mechanism for storing transaction records, which are maintained through several computers linked together through a peer-to-peer network. The blockchain acts as a transparent and distributed ledger that can aid in the tracking of transactions between various parties. However, one of the most popular Blockchain misconceptions portrays blockchain as a cryptocurrency. As a result, it is important to note that cryptocurrencies are digital currencies that can circumvent government regulatory controls on the currency.
Furthermore, cryptocurrencies do not necessitate the intervention of intermediaries. As a result, blockchain technology is the perfect foundation for creating cryptocurrencies. That is not to say that all cryptocurrencies make use of blockchain technology. The IOTA cryptocurrency exemplifies the use of cryptocurrencies without the use of blockchain technology. IOTA employs a Directed Acyclic Graph (DAG), which is a type of distributed ledger technology. Blockchain, on the other hand, is not designed exclusively for cryptocurrencies. Blockchain applications in healthcare for streamlining medical data and better management demonstrate the same.
All Blockchain are Public
Many people have believed this due to the advent of public global blockchains such as Bitcoin. However, this is one of the most popular Blockchain misconceptions that can perplex any newcomer. In reality, public blockchains are not the only kind of Blockchain. Private and hybrid blockchains are also appropriate for a variety of use cases. The launch of Bitcoin triggered a unique phenomenon in both financial institutions and private businesses. Permissioned Blockchain, also known as federated or private Blockchain, is the name given to this phenomenon. Many distributed ledger systems in use today are examples of various forms of blockchain. But there you have it, one theory busted.
Blockchain is completely secure
Blockchain is not by itself more reliable than other technologies. Cryptography is used in blockchain for authentication, permission compliance, integrity verification, and other purposes. The use of cryptography, on the other hand, does not inherently make the system more stable. Although the system is more resilient as data storage and permissions are distributed, compromising the private keys of certain network members may grant attackers complete access to the shared database, including the ability to reverse transaction history. As a result, managing private keys is an important task. There is also the much-discussed “51 percent attack,” in which malicious nodes can double spend or otherwise wreak havoc on Blockchain. If you want to hire blockchain developers, Contact Us.
Blockchain is Hack proof
Transactions on the Blockchain network may be reversed under some conditions by network members. Absolute immutability, like ‘trustlessness,’ does not exist. The misconception that Blockchain transactions are permanent stems from the database’s append-only data structure, which implies that data is only to be added to, but will not be removed from, the database. Blocks containing transactions, on the other hand, can theoretically be reversed if enough nodes agree to collaborate. Reversing transactions on permissioned Blockchain could be much simpler than on public Blockchain, where colluding miners will have to expend computing power and/or cryptocurrency funds to do so. Permissioned Blockchain actors, on the other hand, are bound by legal contracts and agreements intended to disincentivize collusion or other misbehaviour. If ‘mining’ on a permission based Blockchain is easily decentralised through various organisations with different motivations, the Blockchain can be considered tamper-resistant.
Cryptocurrency is useful for criminal activity
True, decentralisation and anonymity are especially appealing to criminals, but they are also appealing to law-abiding citizens living in an economically or politically fragile regions. If you can’t trust your local banks with your money because of corruption, or if your country is in danger of destabilising, it’s arguably the safest place to store your money. Moreover, in many developing countries currency values are rapidly changing and it can cause serious instability. People in regions as such can better their lives. Yes, people can use it for bad, but they can also use it for good. Like with any other technology, we are the ones responsible for its outcomes.