The blockchain revolution is well underway but with so much uncertainty and ‘fake news’ circulating, it can be difficult to distinguish fact from fiction. At E&S Group, we pride ourselves at being at the forefront in the sector, so who better to set the record straight on some of the most common blockchain myths, than our director, Karl Schranz?
“Blockchain, Bitcoin, and DLT are all the same thing”
Whilst they are all related, this is just not true and in fact blockchain, Bitcoin and distributed ledger technology are all completely different things. Blockchain is a type of DLT, but not all DLTs are blockchain and we need to remember this before using the terms interchangeably as they can have very different meanings. As for Bitcoin, it is a cryptocurrency that runs on a DLT, in this case, the Bitcoin blockchain. So in other words, Bitcoin runs on a blockchain, which in turn is a type of DLT.
“Blockchain is just for criminals”
To deny any illicit activity on the blockchain would be a simple denial of facts, but this does not mean we should discard it completely. Crimes and illegal activities are conducted with fiat currency every day and we don’t outlaw it, instead, we make tougher regulations surrounding it and its use and we supervise it more closely. This is what needs to happen with blockchain, remember it is still a new technology and we need to regulate it in an evolutionary manner, as the technology continues to develop. Blockchains are used for countless legitimate, legal, and necessary tasks, the same as everything else.
“Blockchain is the cure for everything”
Whilst we have only just begun to scratch the surface of blockchain’s capabilities as they are vast, it would be overambitious to say that it can solve all of humanities problems. The technology is at its infancy, and like the internet, it will take a good few years to really establish itself. Furthermore, its purpose may continue to evolve over time. Whilst it cannot solve every problem in the business world, it does seem that it has a huge amount of use cases – some proven, some still yet to be proven – but I honestly believe we are seeing the start of something really important with blockchain and the possibilities it will bring.
“Blockchain is totally unhackable”
This is something I see bandied about quite a lot “blockchain is totally immutable and impenetrable to hackers” and this is not strictly true. The truth is that blockchains could fall victim to colluded attacks where one or more individuals with over 50% of mining power have the ability to cheat the network into accepting unlawful or nefarious transactions. Thankfully, the chances of this happening are very slim as it would require an almost impossible amount of computing power. Whatever technology emerges, someone somewhere is going to try to hack it, and whilst blockchain is more secure than many other things, we need to always bear in mind that nothing is completely hack-proof.
“Blockchains are all open”
There are two types of blockchain; public blockchains that are open to all, and private blockchains that are permission-based and are often controlled by a central authority or individual. This means that permission blockchains cannot be considered as completely decentralised, and some would argue if they are even really blockchains at all. A true blockchain is one that is a completely open source, open to all, and where all decisions are made based on consensus and community-backed voting.