Blockchain technology is all the buzz in the world of fintech and business. Some of the hype is deserved, and some stems from a lack of understanding about what blockchain is and isn’t. In this article, investor Dan Calugar sheds some light on blockchain technology by debunking the top six blockchain myths.
When attempting to debunk myths associated with blockchain, it is wise to begin at the top of the mythology food chain, the myth that causes the most confusion. So in the number one spot, we have placed the king of all blockchain myths.
Myth #1 – Blockchain is cryptocurrency: If you peer around the internet looking for articles about blockchain technology, you will find more than one article, published at well-respected websites, that talks about blockchain as if it is either a cryptocurrency or that it’s only used to facilitate the exchange of cryptocurrencies. Neither is true.
Blockchain is a technology that enables decentralized transactions to be recorded on a distributed network. Albeit not as popular as cryptocurrency, there are other uses for blockchain technology. More are being created daily.
Myth #2 – Blockchain transactions are secret and anonymous: This myth likely stems from widespread confusion about the ideas of secure and anonymous. People have a natural inclination to believe that it must be kept secret for something to be secure. In some ways, blockchain technology works completely counter to that idea. While blockchain transactions are encrypted, the basic premise is that the transaction is safe because many people know about it.
Myth #3 – Blockchain is a fad: The number of useful applications for blockchain technology is multiplying. Even if one believed that cryptocurrency is a fad – which it’s not – that would be no indication that blockchain is a fad also. Blockchain will become a fad when we reach a point in our society where we no longer need to protect people from being taken advantage of during a transaction of any type.
Myth #4 – Blockchain is simply a data storage schema: Like thinking that blockchain is a cryptocurrency, believing that blockchain’s primary purpose is to keep records for a decentralized data storage plan stems from how one uses it. Blockchain is ideal for keeping track of decentralized data shards, but like cryptocurrency, that is only one of its many uses.
Myth #5 – Blockchain will revolutionize everything about business transactions: Probably not. Blockchain is really good at what it does – enable immutable transaction records, but that’s not enough to revolutionize every aspect of business records. Blockchain is still a little slow, process-intensive, and challenging to scale.
Myth #6 – Blockchain is volatile: There is a perception that blockchain is a little shady, that it’s part of what supports the dark web or the underworld. One could suppose that this ill-deserved reputation is a holdover from blockchain’s association with cryptocurrency. Nothing could be further from the truth, of course. Blockchain is as legit as technologies come. People that don’t understand how it works may cast a suspicious eye, but that was true of that “new-fangled internet” at one time too.
Nearly every sector, including government, healthcare, transportation, and entertainment, is finding new ways to leverage the immutable transactions enabled by blockchain technology. Everything from IoT device credentials to personally identifiable information can benefit from blockchain’s decentralized ledger and storage. But remember — it’s not cryptocurrency.