This article talks about some of the most common myths and misconceptions related to Blockchain technology, which will help you in gaining an in-depth understanding of the technology.
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Table of Contents
- Most Common Blockchain Myths You Should Know
- The Verdict
If you want to gain an in-depth understanding of Blockchain, it is essential to ward off all the doubts regarding it. Despite being a matured technology and its promising adoption rates and favourable feedback, Blockchain is still relatively new, and there are many misconceptions surrounding this technology. It is important to note that a lot of ‘facts’ you hear are not actually facts, rather misinformed statements or conjectures.
In this article, we will debunk a few common misconceptions about Blockchain technology in order to help you gather a more thorough understanding of the technology.
Most Common Blockchain Myths You Should Know
Here is a list of the most common myths and misconceptions related to Blockchain technology.
Blockchain and Cryptocurrencies are Same
The majority of the crowd still believes that Blockchain and Cryptocurrencies mean the same thing, and therefore they use these terms interchangeably. One of the reasons for this myth is because of the fact that they both became famous around the same time. To distinguish both these terms, cryptocurrencies like Bitcoin are digital assets used as a medium of exchange. In fact, you can say that cryptocurrency is one of the applications of Blockchain. Here it is important to note that not all cryptocurrencies use Blockchain. IOTA is one such exceptional case.
Blockchain is basically a decentralized distributed ledger technology that stores records of transactions, maintained throughout different computers linked to each other through a P2P network.
All Blockchain are Public Blockchains
The majority of people assume that all Blockchains are public. But as a matter of fact, public blockchains are not the only type of Blockchain. There are various kinds, such as private and federated. The different types of Blockchain have their own applications, and there are various other modifications and differences. For example, public ones are permissionless, non-restrictive, distributed ledger systems, which means anyone who is connected to the internet can join and become a part of it. In contrast, a private Blockchain is a permissioned and restrictive one that operates in a closed network. Such Blockchain is generally used within an organization where only particular members are participants of a network. Federated blockchain, on the other hand, is best suited for organizations where there is a need for both types of blockchains, i.e., public and private, and offers better customizability and control over resources.
Technology Only Targets Finance Industry
There is a strong misconception surrounding Blockchain, and that is it focuses only on the finance domain. This assumption would have been true a decade ago, but at present, technology is being progressively used across various industries such as supply chain, healthcare, logistics, manufacturing, digital marketing, cybersecurity, and many others. Additionally, government institutions are another crucial field that has been significantly impacted by Blockchain. Governments all across the globe are adopting and implementing technology to provide cybersecurity, process optimization, and integrate hyperconnected services without compromising trust and accountability.
Blockchain is a Database
Another misconception related to distributed ledger technology is that it is a database. Although Blockchain can be considered as a form of database, a database is undoubtedly not a blockchain for sure. Blockchain store records and transactions within blocks which are visible to everyone. Databases are centralized collections of data stored in the form of tables. Few compare Blockchain with cloud databases, but it is important to understand that cloud databases store digital files in formats such as word documents; Blockchain, on the other hand, store records with a Proof of Existence.
Free and Highly Accessible
There is no reason to believe that Blockchain is free. There is no point in having a technology that performs such massive mathematical functions and implements algorithms without any cost. Blockchain charges a fee, a cryptocurrency transaction fee, to users when performing transactions. Thus nothing comes without a cost. You have to pay the blockchain fee to ensure your cryptocurrency transfers arrive on time.
And when it comes to accessibility, Blockchain developers are still working on Blockchain’s scalability, which is one of the major concerns associated with the technology.
From just being a buzzword to now being a major player, Blockchain has made a lot of efforts in a few years. At present various huge corporations such as Facebook, JP Morgan, among others, are showing their interest, which means technology is here to stay. As we have uncovered the most common myths that exist, you must have gained a clear understanding of Blockchain and its functionalities.
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