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Blockchain is the most talked about technology among Fintech leaders. It is gaining ground among companies and organizations. Considered to be the digital ledger, it is the most transparent technology. It is decentralized, with data stored in each block and across a system or computer network. Whether it’s conducting political elections or observing transparency in philanthropy, the scope of using Blockchain has expanded. But as the technology permeates, some misconceptions could derail Blockchain towards adoption. In this article, we’ll debunk five myths or misconceptions that have spread across the industry.
Blockchain is only used for cryptocurrency
Cryptocurrency is considered the hot cake in business and finance. Since the inception of Bitcoin, many financial institutions have tried their hands on cryptocurrency. A cryptocurrency is a form of digital or virtual currency with decentralized networks based on blockchain technology, which acts as a digital ledger in a matrix of a distributed system. Undoubtedly cryptocurrencies are governed by Blockchain, but the misconception is that the use of blockchain is limited to cryptocurrency. Organizations like Fonterra and Lition are expanding the reach of blockchain technology in healthcare, music, philanthropy, elections, and drug development, while cryptocurrencies are being used for digital transactions and payments between many organizations.
Blockchain and Bitcoin are the same
Bitcoin’s arrival in the market has certainly created a lot of turmoil in the market. As countries examined it under the lens of secure transactions, many organizations were discovering the mechanism of Bitcoin. A common misconception that has taken hold is that both Blockchain and Bitcoin are synonymous with each other. However, Bitcoin is a digital currency, heavily governed by the concepts of Blockchain and has limited use to financial institutions only. Blockchain, while it is a digital ledger configured for multiple use cases at the same time. With its ability to record and store data and its feature of generating an encrypted signature known as a hash, its use is not limited to financial institutions.
Only one type of Blockchain
This is an era where new technologies are emulated quickly and the original idea is expanded and applied to more domains. Blockchain is no exception to this. Sure, Bitcoin was the first Blockchain but since 2016 more than 200 types of Blockchains have been generated to improve operations and maintain transparency. The largest type of Blockchain is Bitcoin and Ethereum. The second type of Blockchain is Private, which requires the authorization and invitation of the network administrator, such as Hyperledger. The third type is the hybrid Blockchain, which works on the principle of both public and private Blockchains, thus combining the advantages of the privacy of the former with the security and transparency of the latter.
Blockchain is tamper-proof
Blockchain is transparent, but certainly not tamper-proof. It uses proof of work, a system that monitors activities in the Blockchain with every transaction or data added. Keep the record of every user who has used Blockchain, across the network of computers or systems. But any alteration in the coding process of the computational processor can disrupt the entire Blockchain. Tampering by an external factor alerts the authority, but it is the tampering / tampering that becomes difficult to detect.
Blockchain is not decentralized
When Bitcoin was introduced to the world, many Fintech experts and consultants applauded its system for not being decentralized. Undoubtedly, Blockchain is a technology known for having a decentralized network, so that activities can be supervised. However, as this is a growing technology and fantasized by many organizations for benefits, a handful of individuals can externally build Blockchain as a decentralized network. By investing heavily in computer hardware, these organizations can invade blocks of transactions, thus disrupting the entire Blockchain process. However, with Blockchain’s open source coding system and robust architecture, such well-known behavior can be thwarted.
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