Blockchains are the powerhouse in cryptocurrency systems for maintaining a secure and decentralized record of transactions. It also facilitates tracking assets (tangible or intangible) in a business network. Many businesses worldwide are adopting blockchain technology to run transactions and store information on the network.
However, like many new technologies, there are a few things that need to be clarified about blockchain technology, and it can be hard to tell the facts from fallacies. This article will compare blockchain myths vs reality to help you learn more about this technology. We’ll also clear up any confusions you might have so you’re ready to enter the market.
Understanding five (5) common blockchain myths vs reality
Whether new to the blockchain scene or not, you might have come across the following statements. This explanation will help you understand the facts about blockchain.
1. Blockchain is the same as Bitcoin.
Blockchain and bitcoin are often used in the same context, and people tend to mix up the two. However, blockchain is the root technology that supports Bitcoin and other cryptocurrencies. It strengthens bitcoin, a cryptocurrency that facilitates exchanges between two people without interference from a third party (bank).
In reality, blockchain covers more range than bitcoin and is relevant in other fields such as insurance, supply chain, healthcare, etc. Using both terms interchangeably doesn’t cover the full scope of the technology and can lead to more confusion.
2. Blockchain uses a cloud-based database.
Due to the recent emerging trends in data storage, blockchain often needs clarification with Cloud service. Even though both technologies are somewhat related, saying that blockchain is a cloud-based database is a fallacy. Blockchain technology uses different encryption styles to store data in a distributed ledger.
A Cloud-based database delivers computing services over the internet, and data accessibility may be public or private. However, blockchains are public ledgers, and anyone can view the records of transactions.
3. Blockchain activity is completely anonymous
One of the common misconceptions about blockchain is that every activity on the platform is anonymous. Most crypto newbies falsely assume that blockchain helps make transactions anonymous. Contrary to popular belief, most activity on a blockchain is traceable, and it is easy to uncover any illegal transactions. Some government organizations partner with popular crypto exchanges to link a wallet’s public address to the owner’s real-life identity. Therefore, tracing any parties conducting illegal activities on blockchain technology is easy.
4. Blockchain only works for cryptocurrency.
One of the most common fallacies about blockchain is that its only use is supporting Bitcoin and other cryptocurrencies. But, the fact is that blockchain is highly versatile and can be helpful for many business procedures. It can be applied in several industries, from finance to healthcare, insurance and even real estate.
5. Blockchain is inappropriate for business transactions.
It’s a fact that there are some minor flaws present in blockchain technology relating to security and privacy. Compared to current systems, blockchain is intensive and takes a long time to process transactions. This has popularized the belief that blockchain will make business transactions more complicated.
Final Notes
With blockchain-based cryptocurrencies’ current hype, you might be tempted to join the market. It’s crucial to explore blockchain myths vs reality to avoid confusion and start on the right path. Before making any commitments, you can also research and learn more about the industry.
