Despite being the most hard-hitting buzzword of the present era, a grand number of people are still clueless about the potential and practical applications of Blockchain. Also, equal, if not more, are the people who claim they ‘understand’ all dynamics & intricacies of this new-age tech, but they don’t.
And as they say, half knowledge is worse than ignorance.
Blockchain, in its crude form, is a type of Distributed Ledger Technology (DLT) whose append-only nature provides a robust mechanism to store data in data blocks. These blocks are linked cryptographically via hash functions, making it virtually impossible to change data of a particular block without disturbing the rest of the block sequence that followed. Simply put, it’s like a growing set of public record that carries a possibility to disrupt multiple industries and streamline their business operations. Bitcoin & other cryptocurrencies are the most popular use cases of Blockchain.
Now, among the good and the bad they say about Blockchain, there are certain misleading ‘facts’ as well which are propagated without second thoughts. Today, we’ll debunk some common myths and misconceptions whirling around Blockchain-
Myth 01- Blockchain Can Be Used to Transform Anything & Everything
Blockchain is like the new big data or AI – too many people are using it as a buzzword and not focused solving a real problem. We like to call them Blockchain tourists!
These words from Ripple’s CEO Brad Garlinghouse sums up all that we have to say.
We agree the code is powerful, but it’s not a solution to all sorts of problems. You need to weigh if your business has scope to introduce a Blockchain innovation or align one with your legacy systems to exploit the power of decentralisation. Ask yourself, will Blockchain enhance consumer consumption? Will it help in cost savings? Will I see a surge in productivity? How many practical use cases are there for my industry? Analyse all aspects effectively and see if Blockchain implementation is worthwhile. Before making any mind, connect with Blockchain experts for a consultation to better recognise the disrupting capabilities of Blockchain for your business.
Myth_02- Blockchain is Only a Storage Mechanism
Things people say!
By design and definition, Blockchain is a distributed database, making a large number of people think (and believe) that Blockchain is a sophisticated storage mechanism. Let’s burst the bubble- it’s one of the perks that arrives when it’s used as an exchange application. Blockchain wasn’t devised to store your comprehensive data but to store information as a transaction, with which you can see every piece of data generating a hash. The hash can be used to verify the authenticity of that data, thus skyrocketing trust and transparency.
Myth_03- Tokens and Coins are the Same Thing
Well, they are not.
Blockchain has Initial Coin Offerings (ICO) and tokens, and they are not synonymous.
Coins bring along a single utility- they act as digital money and can be used to buy or sell things. They can be received, sent, or mined and are not meant to perform any function other than serving as a medium of exchange.
Tokens, on the other hand, are digital assets that can have one or more functions inside a project ecosystem. They can act as coins and also represent an asset or utility.
Myth_04- Blockchain is Bitcoin
We get it- Blockchain gained the recognition it deserves after the unprecedented popularity of Bitcoin. But is Blockchain all about Bitcoin? Absolutely not!
One who has familiarity with the potential of Blockchain can tell you in a heartbeat that Bitcoin is just the tip of the iceberg. The real-world applications and use cases of Blockchain are making waves in the digital world and positively impacting multitudinous industries; Finance, Healthcare, and Logistics to name a few. Bitcoin is just a cryptocurrency designed to facilitate secure online transactions.
To understand Blockchain beyond Bitcoin, check our blog- 5 Practical Non-Bitcoin Applications of Blockchain
Myth_05- Blockchain Can be Scaled Infinitely
Yet another misconception about Blockchain relates with its ability to scale. Blockchain is widely positioned as “growing list of records”, giving an impression that Blockchain can be scaled to an infinite extent. Well, this isn’t the case.
Blockchain can’t be scaled, at least now.
The decentralised consensus mechanism of Blockchain comes with gold-like benefits- fault tolerance, sky-high security, and political neutrality, but associates the big-time pain of scalability. The number of transactions the blockchain can process cannot exceed that of a single node which is participating in the network. It is also to be noted that with the addition of every new node, the phenomenon of inter-node latency comes into play that makes Blockchain weaker. Hope this clears why Blockchain can’t be scaled endlessly.
So, this was our effort to dispel the myths about Blockchain and add more clarity to your knowledge base. We at Studio Fintech are passionate about Blockchain and FinTech- from designing smart contracts to ICO Launch, exchange development, cryptocurrency development and more, we can aid you to identify the possibilities of Blockchain disruption and implement them in your business model. To discuss your idea, contact our Blockchain specialists now!