For several years, blockchain technology has always been a major disruptive force.
It has resisted and overcame the early mistrust of both financial institutions and the general public. This is because of its capacity to ensure openness and remove intermediaries. It does this while maintaining the security of all types of transactions.
But anti-blockchain factions are working hard to soil the good name. This is despite encouraging acceptance rates and positive comments from the general public.
These institutions have created myths that are now linked with the Blockchain network. Continue reading as we tear into pieces the most common blockchain myths.
Blockchain Technology is a Database Hosted in the Cloud
Fact: One of the most prevalent Blockchain fallacies is that they are just cloud-based databases. The truth is that you must download the Blockchain and operate it on internet-connected machines to use it.
All computers in the globe that are running a blockchain are considered nodes on the network. The internet access of the machine running Blockchain is a critical element in the network’s strength.
In cloud-based databases, you store digital files in Word documents format. But blockchains store documents with Proof of Existence.
The Proof of Existence confirms that a specific document exists without revealing the document itself.
Tokens are Similar to Coins
Fact: Blockchain applications in the financial industry have given rise to a variety of blockchain myths. Many individuals use the words coin and token interchangeably without understanding the distinction.
The crypto coins are local for a particular blockchain like Bitcoin and Ether. Each coin serves as a currency and exists without anything more in the Blockchain.
But tokens are resources provided by a blockchain-based project. You can use tokens as a method of payment within the system. This offers comparable functionality to currencies.
The fundamental distinction between coins and tokens is that coins give the privilege of joining a network. Besides, tokens can act as significant parts of the digital property or represent a stake in the firm.
You can also learn more about the EOS price CAD, a native cryptocurrency on EOS.
Blockchain Transactions Are All Anonymous
The most critical component of the blockchain myth vs. reality contrast is the anonymity issue. Most newbies believe that blockchain-based cryptocurrencies may aid in anonymous payment. Well, the assertion isn’t that wrong.
The Blockchain only stores the public addresses of wallets. This prevents exposure of the wallet owner’s name.
But the use of cryptocurrency to make payments for illicit activity may be traceable. It can track down the complete history of transactions. But this happens if someone connects the wallet’s public address to a person’s real-life identity.
Blockchain is Similar to Cryptocurrency
Fact: The launch of Bitcoin in 2009 was the first incidence of widespread awareness for Blockchain. Thus, many individuals mistake Blockchain for cryptocurrency business.
But cryptocurrencies are applications of Blockchain technology. Blockchain is a method for storing transaction records.
You can maintain them across several computers linked together through a peer-to-peer network.
The Blockchain acts as an open and distributed ledger. Thus, it can aid in the recording of transactions between many participants. But one of the most prevalent blockchain misconceptions portrays Blockchain as a coin.
Thus, it is critical to know cryptocurrency is a digital currency. It can circumvent government regulatory restrictions over the currencies.
Also, cryptocurrencies do not need the engagement of brokers. Thus, blockchain technology is the ideal basis for creating cryptocurrencies.
That is not to say that all cryptocurrencies make use of blockchain technology. The IOTA coin exemplifies the usage of cryptocurrencies. This happens without the need for blockchain technology.
IOTA employs a Directed Acyclic Graph (DAG). This is a type of distributed ledger technology.
But Blockchain is not designed particularly for cryptocurrencies. Blockchain applications in healthcare for simplifying medical data show the same.
All Types of Blockchains are Public
Fact: Most individuals have ignored this fact. This is due to the establishment of global public blockchains such as Bitcoin. But this is among the most common Blockchain fallacies that may perplex any rookie.
Truth, there are many kinds of Blockchain apart from public blockchains. There are private and hybrid blockchains that are also appropriate for different reasons.
The advent of Bitcoin triggered unique phenomena. This happened in all financial institutions and private businesses. Permissioned Blockchain is the name given to these phenomena. It’s often referred to as the federated or private Blockchain.
Many distributed ledger systems in use today are examples of types of blockchains. So there you have it, one more myth debunked.
Blockchain is Free
Fact: This is one of the most frequent Blockchain misconceptions you’ve heard. People have linked the cost of Blockchain basing on Bitcoin. This is associated with its use of expensive computers to solve mathematical problems. But the actual price paints a different image.
Bitcoin mining necessitates the use of pricey and powerful gear. This consumes a lot of electricity. Mining bitcoin may use up to 140 terawatt-hours of power. This implies a significant expense.
Thus, there is no need to think that Blockchain is or will be free any time soon.
Blockchain Technology Will Make Groundbreaking Changes Worldwide
Fact: Individuals are prone to believing in this Blockchain fallacy. This is because blockchain technology offers many potential gains.
Also, news stories are fueling such misconceptions. Examples of these stories include Venezuela’s oil-backed cryptocurrency market and Petro. Also, the Bank of England’s increasing interest in cryptocurrencies is among them.
You can see the exaggeration of the excitement around blockchain technology. But you can only see if you take a closer examination at these incidents. Different types of blockchains can reduce the possibility of fraud.
But they can’t remove the possibility of online fraud. Blockchain technology may turn out to be a wasteful digital transformation of a traditional ledger. But this may happen in some situations.
Thus, people are exaggerating the capability of blockchain technology. A valuable sign of Blockchain’s abilities is the immediate need of the hour. As a result, it is critical to recognize that Blockchain is still a long way from accomplishing that goal. But it has the potential to alter the world.
Don’t Fall a Victim of Any of These Myths
So, in the above explanation, you can see the reality behind several blockchain myths. As you debunk the myths, you’ll come closer to the reality of Blockchain and its capabilities.
Also, the truth reveals the limitations of Blockchain, enabling a more accurate grasp of the technology.
Blockchain technology has reached such heights, even as it has only been in existence for 11 years. If you wish to reap the benefits of Blockchain, you must first dispel any misconceptions about it.
We hope you’ve learned something new from this article. Please keep checking our website for more exciting technology articles.