Blockchain: myths and truths

Blockchain: myths and truths

Blockchain technology started out as a part of Bitcoin, but is now rapidly developing into a major technological solution in its own right. However, its development is being held back by some widespread myths. Here are five of the most common ones – and the truth behind them.

MYTH: Blockchain is a synonym for distributed-ledger system

TRUTH: Blockchain is one form of distributed-ledger system, though there are many others. Understanding the principles of distributed-ledger systems will help you to understand the basics of Blockchain. It is, however, only a starting point.

If you really want or need, to understand whether or not Blockchain could work for you in your specific situation, then you will need to research the specific details of Blockchain.

Basically, you will need to understand its specific strengths and weaknesses and what makes it distinct from other distributed-ledger systems.

MYTH: Blockchain was developed by and for criminals

TRUTH: Blockchain was developed to support Bitcoin. Bitcoin is, indeed, sometimes used by criminals, but then so is cash and so are other payment networks.

Bitcoin was designed to be decentralised and unregulated. In any case, Blockchain is not Bitcoin. Saying that Blockchain is associated with crime is like saying that car parks are associated with car theft. It may be true, but it’s misleading and very unfair.

MYTH: Blockchain is too slow to be any good

TRUTH: This myth could well have come about due to Blockchain’s association with Bitcoin and the challenges it has faced gaining acceptance as a payment system.

In short, Blockchain is considerably slower than any of the mainstream payment networks. Attempts have been made to speed it up, but so far there has been no sign of anything that could see the sort of speed gains it would need to become a standard “High Street” payment system.

While this is all very true, again, it’s also rather misleading. In other words, Blockchain may be slow for a payment system, but in other applications, it can be orders of magnitude faster than any other technology available at this time.

MYTH / TRUTH: Blockchain is less secure than it’s made out to be

TRUTH: This is and isn’t true. Media articles that paint Blockchain as 100% resistant to hackers are, frankly, overstating the matter.

Having said that, it’s hard to picture any technology that is 100% resistant to hackers at any time and it’s even harder to picture a technology that can resist 100% of hacking attacks forever.

Basically, if humans can make it, then humans can usually break it. On the other hand, in terms of security, Blockchain is about as good as it gets right now.

MYTH: Blockchain is open by design

TRUTH: Blockchain is distributed by design. There is a difference and it’s important. You can run private Blockchain networks in much the same way as you would run private clouds.

Essentially, there is a barrier between the Blockchain and the “outside world” but internally the Blockchain is open.