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The 13 most common blockchain myths explained and demystified

CyberWisdom Safe Harbor Commentary on blockchain myths

Thenextweb.com notes that things we don’t talk about but every new technology has hype and reality. The “Binary District Journal” tried to separate the wheat from the chaff and set aside the common myths around the blockchain.

Now everyone and their grandmother has heard of blockchain technology – unless you have been living under a rock, that is. The best way to understand the blockchain is to think of it as a set of records or treat it as a ledger that contains transactions (financial or otherwise).

Now, this is a turning point: This ledger is shared among computer networks and is regularly updated and coordinated. In other words, it is a distributed ledger. This is the essence of the blockchain.

The emergence of Bitcoin in 2008 highlighted the blockchain technology – cryptocurrencies were attributed to the mysterious Satoshi Nakamoto. There are many potential applications of the blockchain: it has been used for everything from transferring funds and arranging musician performances to starving the fighting world.

Myth 1. There is a unique blockchain

Considering the discussion of the blockchain, assuming there is only one blockchain, you will be forgiven. In fact, so far, reading this article, you may have the same impression.

The reality is that there are many blockchains and each blockchain has different uses. Blockchains can be open and public, and can also be operated privately by companies and even individuals. The idea is to use the plural rather than the singular.

This myth exists in part because of the media. It often talks about the blockchain as if it were a computer program that everyone uses to do the same thing.

Myth 2. Blockchain is money

Although the first blockchain is used for digital currency Bitcoin, the potential of blockchain technology far exceeds money and finance.

Today, blockchain is being used to build smart contracts, digital identity solutions, cloud storage, voting systems, and even aircraft security services. The blockchain does not care about the data types contained in the ledger because it is really just a record list.

Many people think that the blockchain is all about money because the bitcoin is the most popular of all blockchains, and the two terms are used in close combination with each other.

Myth 3. Blockchain and Bitcoin are the same things

This brings us to a common misconception that blockchain and Bitcoin are the same things. Although Bitcoin is a digital currency based on blockchain technology, it is different from blockchain.

There are many other blockchains, such as Ethereum, waves, and ripples. Each blockchain has different uses. Bitcoin may get there first, but it is different from the blockchain. If you think that the blockchain is the foundation for building Bitcoin, you will understand its correctness every time.

This myth is very common because many people think that the Bitcoin blockchain is the only blockchain, and the two are interchangeable.

Myth 4. Blockchain is a way to solve fraud

If a drug can cure all diseases, you may know that it will not cure any disease. Blockchain has become an aura of insurmountable good security blankets. It is touted as a panacea for hacking, identity theft, and fraud.

Due to the nature of the blockchain, anyone who wants to tamper with the blockchain must make changes to the records stored on multiple computers or use a lot of computing power to mine new branches of the blockchain.

Despite this, there are still cases where vulnerabilities in blockchain or blockchain systems are exploited. Hong Kong-based Bitfinex lost $65 million in hacking incidents, and then the decentralized autonomous organization (DAO) on record was attacked by hackers, resulting in a loss of $60 million.

There is also a notorious combination of hackers, known as 51 screws, which attack the Shift and Krypton blockchain clones.

The reason why blockchain is considered by many to be fraud-proof may be that it is considered by many proponents to be immutable and completely safe. This is just fantasy thinking.

Myth 5. The blockchain is immutable

well. As the DAO case shows, blockchain can be used. In response to hacking, Ethereum conducted a spin-off transaction; thereafter, the digital currency was divided into two parts.

The Bitcoin blockchain also has its weaknesses. Anyone who can collect mining resources can overwhelm and control the blockchain. All they need is more digging than the rest of the Bitcoin network. This attack is called a 51% attack.

Given the difficulties in collecting these resources and the costs involved, this cannot be performed by one person or a group. However, the government may do this. In the case of a variable blockchain, transactions can be revoked if all participants agree. This element is particularly useful in private blockchains because their consensus is easier to implement.

The invariant myth of the blockchain stems from the ideological aspirations of some people in the encryption community, not the actual situation. Facts have proved that the code is not a law.

Myth 6. Cost-effectiveness and cheapness of blockchain

This depends on. As of now, the blockchain still requires more than one computer to operate; in the case of a blockchain such as Bitcoin, mining costs are too high. Computing power can lead to actual costs such as electricity, labor, and infrastructure.

This is why bitcoin mining is mainly concentrated in countries where hydropower is cheap, manpower is cheap, and the surrounding environment is mild. An article on the Techonomy.com website states: “The key to surpassing cryptocurrency applications is to make work prove to be cheaper. If the price is cheap enough, anyone can do it, and transactions with a negligible value may occur. For example, a High school can keep their official time tracking stars through the blockchain. ”

Until then, it’s hard to say that blockchain is the right solution for all applications and everyone.

The prevalence of this myth is most likely due to the fact that the use of Bitcoin or other digital currencies to send funds from one place in the world to another is relatively cheaper than a traditional transfer of funds.

Myth 7. Only large companies can use the blockchain

This seems to be in contradiction with the above view, but there is nothing that can prevent non-enterprise users or small companies from using the blockchain.

For example, Ascribe uses blockchain in the art field; UProov, in the field of time stamp photographs and video; and Warranteer is using blockchain to verify the guarantee of retail industry products.

Then there is Genecoin, which hopes to “back up” the DNA by placing a copy on the blockchain; and IoT Filament, which uses a blockchain to talk to each other in your toaster.

The benefit of blockchain is that it can be scaled to fit the needs of users. Therefore, various individuals, groups, businesses and non-commercial users can use it.

The argument that blockchains are only applicable to large enterprises may stem from the fact that many large companies are actually doing blockchain projects, which may give some impression.

Myth 8. You can store your Excel file on the blockchain

Blockchain is not about data storage. Many people think that documents can be stored in the blockchain, but in reality, the blockchain contains only the information that exists in a particular document.

Data (such as documents or spreadsheets) can be stored in the data lake and can only be accessed by the owner of the document.

This myth is most likely due to the fact that cloud storage is intangible. With the cloud, there is no physical drive to store information, and there is no physical storage device in the blockchain for blockchain transactions to take place. However, documents cannot be stored in the blockchain.

Myth 9. All blockchains are public

Indeed, some of the most well-known blockchains are public. However, blockchains can be public, private or semi-public. It is even possible to stack private blockchains on public blockchains.

The basic difference between public and private blockchains is simply who has access. For example, Bitcoin is a public blockchain, and Corda is a private blockchain developed by the R3 Alliance.

Many people think that all blockchains are open because they only consider cryptocurrency blockchains, which is largely open.

Myth 10. Only criminals use blockchain

Bitcoin and blockchain have gained some reputation in the selection of online drug traffickers – that is, in the Silk Road market. It is also used for some ransomware attacks.

However, Bitcoin and other cryptocurrencies are also used for completely legal reasons. The Bitcoin blockchain has a public record of each transaction that took place on it, so it may not be the best currency for criminal activity. It may be better to use cash for this purpose – it does not mean that we encourage you to start criminal activities.

Remember that like all other currencies, bitcoin is just a way of exchanging value.

This myth mainly lies in the media fanaticism surrounding Bitcoin and other high-profile cases on the Silk Road.

Myth 11. Smart contracts are the same as legal contracts

When conditions are met, smart contracts perform some operations. When combined with the Internet of Things, smart contracts take on more value.

There is no legal value in smart contracts. However, they can be used to prove that legality meets certain conditions. Smart contracts are not legally binding. In this regard, clever contracts can be seen as a tool rather than a contract.

The confusion surrounding the legal weight of smart contracts undoubtedly comes from using the term “contract.”

Myth 12. Blockchain exposes your private data

For the public blockchain, there is a misunderstanding that all your transaction details are open and there is no privacy. Nothing will be far from the truth.

The only aspect of a transaction in the public domain is the transaction amount and hashing – the code obtained by running the transaction details through an encryption function.

Comparing this with your local financial institution may put your entire life history and family life at their fingertips. They may know more about your consumption patterns, your assets, and liabilities than you think.

The word ‘public’ in the public blockchain is the reason for spreading this myth.

Myth 13. Blockchain is just a buzz

According to the report of Silicon Valley Republic, according to PriceWaterHouseCoopers expert Seamus Cushley, nearly $1.4 billion was invested in blockchain technology in the nine months to November 2016.

In the same article, Seamus also claimed that “There are marginal experiments in progress, but people are on the road. They will turn from fear to understanding, and respect their potential. They are in the later stages of this journey.”

It would be unfair and inaccurate to say that blockchain is just a buzz or hype. Blockchain technology is evolving and its full potential remains to be achieved, but we are successfully completing it.

It is understandable that the blockchain is just a myth or fashion myth. Since ancient times, the emergence of new technologies has created an infinite sense of possibility. We have experienced the space age, the nuclear age and the Internet bubble. Now we live in the blockchain revolution.

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With every new technology, there is hype and there is reality. Binary District Journal attempts to separate the wheat from the chaff and put to rest the common myths surrounding blockchain. Everyone and their grandmother has heard of blockchain technology by now — unless you’ve been living under a rock, that is. The best way to understand blockchain is to think about it as a collection of records, or as a sort of ledger which contains transactions (financial or otherwise). Now here’s the twist: this ledger is shared between a network of computers and is updated and reconciled regularly. In… This story continues at The Next Web… Engaging post, Read More…

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