Top Five Myths of Blockchain

While Blockchain world is on expansion with Zug, a town in Switzerland keen to establish itself as “Blockchain capital.” Or another European blockchain trading firm completing their live operations involving major banks and companies. Or the ongoing discussion of Blockchain establishing itself as an Operating system, the world is still perceived by its myths on Blockchain.

Today our post would talk about some of the common myths and the truth behind them… let’s get started –

Myth # 1 – Free Free Free … Blockchain is Free

Accept the fact that NOTHING in this world is free, so if you thought setting up a distributed ledger – block by block is free of cost, it is not. Blockchain although an open community needs miners to validate each transaction by solving the problem. The problem requires high computing power, and someone needs to pay for it. Amongst all the miner who gets the correct answer quickly gets paid, that’s how miners earn money by giving away the computational power.

Myth # 2 – Blockchain and Bitcoin are Same

While Blockchain is a technology, Bitcoin is one of the use cases of that technology. Let’s take an example – assuming you a have log of wood, now that wood could be crafted as a chair or a table. Similarly, the wood, in this case, is Blockchain that has been crafted as Bitcoin.

Myth # 3 – Distributed Ledger Technology [DLT] and Blockchain are Same

Yes, partially it is true because Blockchain is a type of distributed ledger technology, but it is not the only Distributed ledger technology existing in the world. A Distributed Ledger is where no central authority exists, and nodes are interconnected with every node saving an identical copy of transactions/data. Blockchain again a category of the Distributed ledger is a sequence of blocks that differ the way data is structured in blocks, grouping identical ones together. It may not happen in a distributed Ledger technology. Also, DLT does not need Proof of work to validate transactions. One of the keynote to remember is that – all blockchains are distributed ledgers, but not all distributed ledgers are blockchains

Myth # 4 – Blockchain is only for Banking and Finance

Blockchain technology is not restricted to any one sector, because of its basic nature of decentralization, distributed, immutable, historical, encrypted, could be customized as public/private it could be used across any sector, i.e., Health, Aviation, Energy, Telecom, Banking, etc.

Myth # 5 – Everyone Should Shift to a Blockchain Network

As world economic forum stated to ask these 11 questions to analyze whether your business would benefit from Blockchain technology or not –

  1. Are you trying to remove intermediaries?
  2. Are you dealing with digital assets?
  3. Would it be possible for you to create a digital authoritative record for the asset?
  4. Would you be fine with the slow/medium paced transaction?
  5. Do you want to rely on a trusted third party?
  6. Are contributors willing to contribute computing power or resources?

If you answered YES to all the questions above, your business may need Blockchain or else a decentralized system is good for you. Access the full questionnaire and image here.

Article Credits : Samiksha Seth

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