Misconception 1: Blockchains are magical cloud databases
Blockchains are linear lists of simple transaction records. In the peer-to-peer network, the file grows indefinitely because it has being appended only, so entries has not be deleted.
A pdf file or a Word document has not being store on a blockchain. A distributed ledger can only provide proof of existence; it can only contain a code that certifies the existence of a document, but not the document itself.
Blockchains has being used for complex and technical transactions, such as verifying a diamond’s authenticity or individual identity. Similarly, there is talk of a Blockchain application for the bill of lading in trade finance, which would reduce costs and speed up transactions.
Blockchain can support these cases and mitigate the risk of fraudsters tampering with the ledger, but it does not eliminate the risk of fraud online and still raises privacy concerns. Furthermore, Blockchain technology is still inefficient when compared to maintaining a traditional ledger for many of these cases.
Misconception 3: No cost associated with blockchain
It has not feasible to run Blockchain at a low cost or with high efficiency, contrary to what has commonly believed. A single version of truth (SVT) has produced when multiple computers solve mathematical algorithms to agree on a final immutable result. For each ‘block’ in the Blockchain, a large amount of computing power has typically required. The Blockchain service requires a lot of computer power, which someone must pay for.
The term Blockchain refers to many different technologies. They are available in public and private versions, open and closed source, general purpose, and tailored to specific applications.
All of them have crypto-backed, distributed, and have some form of consensus mechanism. Distributed Ledger Technologies include Bitcoin’s Blockchain, Ethereum, Hyperledger, Corda, and IBM and Microsoft’s Blockchain-as-a-Service.
Misconception 5: Anything and everything would be done with a blockchain
The code is powerful, but it isn’t magical. There’s a reason why Bitcoin and Blockchain developers can be evangelists. Rather than the government or lawyers, the Blockchain has seen as an authority based on mathematics. According to some developers, Blockchains and smart contracts will replace money, lawyers, and other arbitration bodies one day. Cryptocurrency has still far from mainstream, and the code has limited to the number of cryptocurrency transactions in the chain.
It has not owned or controlled by any national or corporate entity. Therefore, evangelists hope private Blockchain technology will provide the foundation for dozens of encrypted and trusted cryptocurrencies. On the surface, Bitcoin appears to be a massive network. According to a Gartner report, the Blockchain network is similar in size to the NASDAQ network. This may change if cryptocurrency takes off and records become larger. In the short term, though, the Blockchain network is roughly analogous to current financial networks.
Misconception 7: Blockchain ledgers have locked and irrevocable
Similar to bank records, large-scale transaction databases are, by their nature, private and tied to specific financial institutions. Blockchain’s power is that the code is publicly available, transactions are verifiable, and the network is cryptographically secure. As a result, fraudulent transactions have rejected by the network, which prevents fraud. Rewriting historic transactions is not in participants’ financial interest since mining the chain provides financial incentives in the form of Bitcoin in their Bitcoin wallet. While computational resources improve with time, so too does the possibility of deception. Future processing power may have an impact on the integrity of the contemporary Blockchain.
Inherent permanence and transparency are two of the main selling points of Blockchains. Many people believe that means Blockchains have unaffected by outside attacks when they hear that. The more distributing and larger the network, the more secure it has believed to be. But no system or database will ever be completely secure. By developing applications on top of Blockchains, applications can catch unauthorized changes to records.
Misconception 9: Blockchain only be used in the financial industry
The Bitcoin cryptocurrency, the first application of blockchain, caused waves in the financial sector. Finance has undeniably one of the many areas where it has being apply. Several international banks, such as Goldman Sachs or Barclays, have invested heavily in this technology due to its importance to the financial world. In addition to the financial sector, it can and will be using in real estate, healthcare, as well as personal identity creation. It could potentially provide pharmaceutical companies with proof of existence of medical data.